For the first time in 23 quarters — that’s nearly six years — old-school tech giant International Business Machines Corp. (NYSE:IBM) reported positive revenue growth.

And IBM stock fell on the news. By about 4%.

Why? Because IBM stock had rallied nearly 13% from mid-November into the fourth-quarter earnings report on expectations that IBM would break its negative revenue growth streak. The company did that, so investors took profits off the table. It was a “buy the rumor, sell the news” event.

So is this subsequent selloff a “buy the dip” opportunity? I don’t think so. Upside in IBM stock is limited from these elevated levels. Here’s why:

IBM Stock Is Maxed Out

IBM’s quarter was pretty good.

The Strategic Imperatives side of the business (which is where all the sexy, hyper-growth segments are) posted revenue growth of 14% in the quarter. That is the best growth mark that business has posted this entire year, so things are clearly inflecting upward.

It is a broad-based business acceleration. Cloud revenue growth jumped to 27%, from 20% in the prior quarter. Analytics growth ticked up to 6%, from 5%. Mobile growth was 21%, versus 7%. Security growth more than doubled to 127%. In almost every one of IBM’s growth businesses, things picked up in the fourth quarter.

And yet even with that broad-based growth acceleration in its growth businesses, IBM revenue still only inched up 1%. That is because Strategic Imperatives represents 46% of total revenues. The other 54% belong to IBM’s legacy businesses, which are in secular decline. There is no sign that this secular decline will reverse any time soon.

So 1% revenue growth is here to stay.

Meanwhile, margins are eroding quickly. Gross margins dropped 140 basis points last quarter, while pre-tax margins dropped 210 basis points. Clearly, IBM is having to spend big in order to fuel big Strategic Imperatives revenue growth. But that is only fueling 1% total revenue growth. So margins are coming down, but revenues are only going up 1%.

The net result? Operating earnings rose just 3%. Next year, operating earnings aren’t expected to rise at all.

In other words, this is a zero-growth story. Yes, that is better than the negative growth narrative which has dominated IBM stock for the past five years, but it’s still not a good narrative. Flat growth prospects don’t exactly excite an investor base to pay a premium for the stock.

IBM Stock Valuation

Consequently, all things come back to valuation with IBM stock. As I’ve pointed out before, the current valuation is over-extended at these levels.

IBM stock has traded around 12-times trailing earnings over the past five years.  During that time frame, IBM’s price fell 15% while the S&P 500 rallied 90%. In other words, 12-times trailing earnings wasn’t cheap enough to catalyze long-term share price out-performance.

With growth prospects improving but still tepid, a 12-times multiple finally feels appropriate. Slap that long-term average earnings multiple on next year’s guided earnings estimate of $13.80, and you get a 1-year forward price target of between $165 and $166.

IBM stock is at $163 today. That implies less than 2% upside in a year.

Bottom Line on IBM

Just like the whole IBM growth narrative, a 2% potential return profile on IBM stock isn’t exactly exciting.

Don’t let the headlines fool you: While IBM’s narrative is improving with growth coming back into the picture, it’s still a narrative mired in flattish growth prospects.

That makes IBM stock, which has rallied to multi-month highs, a risky play at these elevated levels. The post-earnings reaction is proof of this.

As of this writing, Luke Lango did not hold a position in any of the aforementioned securities.