IBM's AI Renaissance: Stock Soars on Cloud and AI Strategies

IBM stock gets a price target hike from Wedbush on AI comeback

Despite a strong run this year -- IBM stock is up about 28% so far in 2025 -- Wedbush says the company is in the "early stages of a renaissance of growth," powered largely by its $6 billion (and growing) generative AI business. The bullish case hinges on what IBM has quietly built: an AI platform that's already threaded through more than 70 enterprise workflows, from sales and finance to marketing and IT. Its flagship WatsonX platform, originally launched as a reimagining of the Watson AI brand, has evolved into a serious contender in the generative AI platform wars. IBM is at the forefront of quantum computing. And thanks to its hybrid cloud muscle (see: Red Hat and OpenShift), IBM is well-positioned to meet enterprise clients where they are, especially as analysts expect three-quarters of AI applications to run on containers by 2027.

IBM Keeps Hitting Record Highs. Bank of America Says There's Still Room for Gains

IBM's stock has added nearly a third of its value so far this year. International Business Machines (IBM) shares are on track to close at an all-time high for the third straight session. Bank of America just lifted its price target for the stock even higher. The stock edged about 1% higher in recent trading at $285.83, on its way to topping Tuesday's record-high close at $283.05. It's added nearly a third of its value since the start of the year. "IBM, despite trading at all-time highs, remains interesting," BofA analysts wrote in a note to clients Wednesday, pointing to the company's growth potential in generative AI, as well as quantum computing. The company represents a "defensive investment" with improving revenue growth, BofA said, "which in turn can drive higher cash flow." The analysts lifted their target to $320 from $290, well above the $261 mean of analysts surveyed by Visible Alpha. The new target comes as IBM launched new software Wednesday it says could help clients keep their AI agent systems "responsible at scale." Earlier this month, IBM also said it believes it has a "viable path" to building the world's first large-scale, "fault-tolerant" quantum computer by the end of the decade.

Microsoft and IBM Just Hit Fresh Highs. Both Are Still Set for AI-Driven Gains, Analysts Say

Microsoft (MSFT) and International Business Machines (IBM) shares both closed at record highs Monday, building on a string of recent gains. Shares of Microsoft edged almost 2% higher Monday to close at $486, while IBM added nearly 3% to $289.18, with both among the Dow's best-performing stocks for the day. In 2025 so far, IBM stock has gained nearly a third of its value, while Microsoft has climbed 15%. Still, some Wall Street analysts have suggested both could have room to rise, expecting more AI-driven gains. Last week, Bernstein analysts reportedly said Microsoft's partnership with OpenAI "can generate huge potential revenue upside" for its Azure cloud platform. Wedbush meanwhile said Microsoft "is currently in the driver's seat on the AI front," in a note to clients. Wall Street's consensus price target according to Visible Alpha is about $531, implying 9% upside from Monday's close. IBM meanwhile could be "well-positioned to capitalize on the current demand shift for hybrid and AI applications," Wedbush analysts said Friday. The firm raised its price target to $325 from $320, which represents a 12% premium to Monday's close. With its recent gains, IBM has surpassed the mean of targets compiled by Visible Alpha at $264. IBM launched new software last week it says could help clients keep their AI agent systems "responsible at scale." IBM also recently said it believes it has a "viable path" to building the world's first large-scale, "fault-tolerant" quantum computer by the end of the decade.

IBM Stock Remains Under-Owned Despite Rally, Analyst Sees Further Upside Potential - IBM (NYSE:IBM)

Bank of America Securities (BofA) analyst Wamsi Mohan reiterated a Buy rating on International Business Machines Corp. IBM, raising the price forecast from $290 to $320. Despite trading at all-time highs, Mohan argued that IBM remains interesting due to its transformational initiatives, positioning for growth in Gen AI, Agentic AI (and eventually quantum), and strong FCF driven by internal productivity initiatives. The analyst highlighted IBM's appeal as a defensive investment, noting its improving revenue growth. According to Mohan, this growth is expected to generate higher cash flow, which IBM can then strategically re-invest into further mergers and acquisitions (M&A). Also Read: IBM, Google Emerge As Top Investors In Quantum Computing With Most Patents Issued In 2025: 'Only Two Companies Seriously Investing,' Says Martin Shkreli He said IBM underwent a significant transformation over the last five years by shifting its software segment towards strategic M&A investments, shedding lower-growth or high-cost businesses, and rebalancing its portfolio towards cloud and AI trends. The Mainframe has become more relevant and drives everything from AI to increased software attachment and higher-quality MIPS in transaction processing, all of which support higher (accelerating) growth in the future, Mohan mentioned. The analyst said the public cloud, a headwind from 2010-2020, incrementally poses a lower risk, while Hybrid takes a firm hold. He said IBM's platform approach also drives higher value, given the multiplier effects of Hardware and Consulting. Mohan asserted that GenAI and RedHat can drive acceleration in the portfolio. The analyst said that IBM remains structurally under-owned and underweight despite its recent rally. He noted that this disconnect stems from the underperformance from 2010-2019, as revenues, margins, and FCF were under pressure. While bears acknowledge the turnaround (2020-2025), the valuation relative to the growth profile remains a hurdle for many, Mohan said. The analyst noted that while IBM has historically traded at a discount to large-cap software peers, its recent re-rating has pushed its valuation closer to premium territory despite still-limited growth. As of the second quarter of 2025, Mohan noted that IBM trades at roughly 26x forward P/E and 21x P/FCF, more aligned with faster-growing SaaS names than legacy IT vendors. Microsoft Corp MSFT trades at ~30x forward P/E and 42x EV/FCF but is growing revenue at 14-15% with higher operating leverage and leadership in cloud, office productivity, and AI, the analyst said. Oracle Corp ORCL trades at ~28x forward P/E and 357x EV/FCF (FCF suffering from OCI investments) with double-digit revenue growth. However, he noted that the company has transitioned a significant portion of its business to recurring cloud-based revenue and has a strong IaaS strategy. In contrast, Mohan said that IBM's software segment grows ~6-8% organically and lacks a flagship SaaS product or hypergrowth vector. He stated that much of its valuation uplift has been driven by cost efficiencies, dividend support, and investor rotation into "defensive tech" amid market volatility. He noted that these drivers are less durable than secular product leadership or developer ecosystem strength. Moreover, Mohan said that IBM's reliance on M&A to sustain growth could cap FCF expansion and weigh on the return on invested capital (ROIC). If the growth fails to accelerate meaningfully, especially in AI or hybrid cloud, investors may reprice the stock closer to legacy IT multiples, exceptionally if broader tech resumes outperforming, the analyst said. While IBM may benefit from low expectations and under-ownership, its current valuation offers little margin of safety unless it can prove that mid-single digit growth and 50%+ FCF payout justify a higher terminal multiple, he said. For IBM, Mohan projected fiscal 2025 revenue of $65.8 billion and EPS of $10.95. Price Action: IBM stock is trading higher by 1.18% to $286.39 at last check Wednesday. Read Next: Marvell Launches New Power Regulator And 2nm Memory Chips To Boost AI, Cloud Efficiency Photo via Shutterstock IBMInternational Business Machines Corp$285.810.97%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum91.45Growth76.59Quality60.47Value17.23Price TrendShortMediumLongOverviewMSFTMicrosoft Corp$479.000.20%ORCLOracle Corp$210.981.34%Market News and Data brought to you by Benzinga APIs

Could IBM Stock Surge Another 16%? | The Motley Fool

Shares of International Business Machines (IBM 2.96%) have soared more than 60% over the past year as the company's cloud and artificial intelligence (AI) strategies meshed with investors. IBM has not only returned to consistent revenue and free-cash-flow growth, but growth is now starting to accelerate. Revenue was up 3% adjusted for currency in 2024, and it's expected to rise at least 5% in 2025 despite an uncertain economic backdrop. Last week, an analyst at Wedbush boosted his price target on IBM stock from $300 to $325, implying an additional 16% upside from Friday's closing price. While analyst price targets shouldn't carry much weight with investors, the reason behind the price target boost should be of interest. Wedbush calls IBM an "AI winner" and expects the company's "growth renaissance" to continue. Unlike other technology giants buying up mountains of powerful AI accelerators for their data centers and training highly advanced AI models, IBM is focusing on solving real problems for its enterprise customers. IBM's AI business has two main parts: software and consulting. While software is important, consulting is the secret sauce. On the software side, IBM offers its Watsonx platform, which enables customers to train, deploy, and manage AI models and agents with advanced governance features. For a large enterprise with sensitive data and strict regulatory requirements, a trusted AI platform like Watsonx is critical. IBM does offer its own AI models, although the focus is on low costs and high efficiency. IBM's Granite family of models are much smaller than top-tier AI models, but they're designed to be fine-tuned for specific tasks. The Granite 4.0 family of models includes Granite 4.0 Tiny, an AI model capable of being run on consumer-grade hardware. Using the most advanced AI models, running AI workloads can be extremely expensive. Part of IBM's pitch is that its AI platform can help enterprises lower costs. IBM has booked more than $6 billion worth of generative AI-related business, but the majority actually stems from its consulting business. Enterprises need an AI software platform, but they also need guidance, implementation, and other services. IBM's consulting arm can work with clients to deploy AI workloads on third-party clouds or IBM's own cloud. Watsonx is available on AWS and Azure, so clients already committed to those platforms can still make use of IBM's AI services. It's impossible to know how the AI industry will evolve over the next few years, given how quickly the technology is advancing and how much money is being thrown into AI data centers. While providing AI compute infrastructure or training the most advanced AI models could certainly be viable business models, IBM's approach looks likely to pay off. By focusing on delivering value to its enterprise clients with consulting services and inexpensive yet capable AI models, IBM is positioned to be an AI winner. Shares of IBM are not the bargain they were a few years ago, but there's still a lot to like. IBM expects to generate free cash flow of about $13.5 billion in 2025, putting the price-to-free cash flow ratio at 19. That's not necessarily cheap, but the valuation looks reasonable considering IBM's success in AI. Beyond AI, IBM has some other long-term growth opportunities worth mentioning. Most notable is quantum computing, which could eventually be a major business for IBM. IBM recently outlined plans to build a full-scale fault-tolerant quantum computer by 2029. If successful, IBM's quantum computers could find real-world applications and tap into what could be an enormous market opportunity. Investors shouldn't care all that much about what analysts say, but in this case, Wedbush appears to be on the money. IBM's AI strategy is accelerating the company's growth, and it should continue to do so for the foreseeable future.

IBM: Wedbush raises TP

Wedbush has reaffirmed its "outperform" rating and raised its target price from $300 to $325 for IBM, one of its favorite software stocks, as "the AI revolution is set to accelerate in the coming years." While the stock has performed well so far in 2025, we believe IBM remains overlooked and is still in the early stages of a growth renaissance, with AI as a key driver, the broker said. Copyright (c) 2025 CercleFinance.com. All rights reserved. The information and analyses published by Cercle Finance are provided solely as a decision-making aid for investors. Cercle Finance cannot be held liable, directly or indirectly, for the use of such information and analyses by readers. Anyone who is not an expert in the field should consult a professional advisor before investing. This information is provided for informational purposes only and does not constitute an offer to sell or a solicitation to buy.