IBM Secures $9.5 Billion in AI Contracts, Boosting Enterprise Productivity

Written by Emily J. Thompson, Senior Investment Analyst

IBM-1.21%

Source: NASDAQ.COM

Updated: 12h ago

0mins

Source: NASDAQ.COM

AI Business Growth: IBM has secured $9.5 billion in AI-related contracts through a combination of consulting services and software, which not only enhances the company's market position but also indicates its potential in unlocking enterprise productivity.
Strategic Transformation: After facing multiple crises, IBM has successfully transformed into a leader in hybrid cloud computing and AI solutions, demonstrating its adaptability and foresight in technological shifts.
Market Opportunity: An MIT study reveals that 95% of in-house AI pilots fail to yield meaningful returns, while partnering with AI vendors significantly increases success rates, making IBM's value proposition particularly compelling.
Cash Flow Expectations: IBM anticipates generating approximately $14 billion in free cash flow for the year, and although its stock trades at over 20 times free cash flow, this is considered reasonable given the growth potential of its AI business.

IBM

$302.05+Infinity%1D

Analyst Views on IBM

Wall Street analysts forecast IBM stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for IBM is 295.18 USD with a low forecast of 210.00 USD and a high forecast of 350.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.

13 Analyst Rating

7 Buy

5 Hold

1 Sell

Moderate Buy

Current: 305.740

Low

210.00

Averages

295.18

High

350.00

Current: 305.740

Low

210.00

Averages

295.18

High

350.00

Erste Group

Hold -> Buy

upgrade

2025-12-05

Reason

Erste Group

Price Target

2025-12-05

upgrade

Hold -> Buy

Reason

Erste Group upgraded IBM to Buy from Hold following the "good" Q3 report. The firm sees the company's sales increasing more than expected in 2026. The shares should rally on IBM's positive outlook and price gains, the analyst tells investors in a research note.

Oppenheimer

Outperform

initiated

$360

2025-11-21

Reason

Oppenheimer

Price Target

$360

2025-11-21

initiated

Outperform

Reason

Oppenheimer initiated coverage of IBM with an Outperform rating and $360 price target. The firm says its bullish stance is predicated on its belief IBM's software portfolio should see sustained "double-digit" revenue growth driven by strength in Automation and improving growth in RedHat, consulting should grow at a sustained "low single digits" with recovery in application development/management, and additional revenue optionality with creation and management of AI applications. Oppenheimer believes these drivers will result in strong expansion activity with existing customers, and drive continued gross and pre-tax margin expansion. The stock should also re-rate higher when IBM's pivot to software is more widely appreciated, it adds.

Melius Research

Benjamin Reitzes

Buy

maintain

2025-10-31

Reason

Melius Research

Benjamin Reitzes

Price Target

2025-10-31

maintain

Buy

Reason

After having spent a day at IBM's quantum lab and meeting with Jay Gambetta, Director of IBM Research, Melius Research analyst Benjamin Reitzes reiterates a Buy rating on the shares, telling investors that IBM has the most quantum computers in use today, "by far," and arguing that its potential in quantum "looks like it could amount to billions of high-margin annualized revenue" starting in 2029. The "Starling" line of quantum computers has the potential to unlock capabilities to run revolutionary applications on a 200 qubit platform with an error correction rate that "finally allows this technology cross the chasm," according to the analyst, who adds that IBM seems to have "the ingredients to win in Quantum since it arguably has the best hardware roadmap and the mindshare of developers with its Qiskit platform."

UBS

Sell

maintain

$200 -> $210

2025-10-23

Reason

UBS

Price Target

$200 -> $210

2025-10-23

maintain

Sell

Reason

UBS raised the firm's price target on IBM to $210 from $200 and keeps a Sell rating on the shares. The firm, which raised its price target as it rolls its valuation basis to calendar year 2027, argues that "key metrics flash caution" into 2026 and that it is "not too early to focus on the puts and takes heading into" the outlook for next year as Red Hat and TP constant currency growth "disappoint" in Q3.

About IBM

International Business Machines Corporation is a provider of global hybrid cloud and artificial intelligence (AI) and consulting expertise. The Company’s segments include Software, Consulting, Infrastructure and Financing. The Software segment includes hybrid cloud and AI platforms, which allow clients to realize their digital and AI transformations across the applications, data, and environments in which they operate. The Consulting segment focuses on integrating skills on strategy, experience, technology and operations by domain and industry. The Infrastructure segment is focused on the hybrid cloud infrastructure market, providing on-premises and cloud-based server and storage solutions. In addition, it offers a portfolio of life-cycle services for hybrid cloud infrastructure deployment. The Financing segment provides client and commercial financing, facilitating its clients’ acquisition of hardware, software and services. It helps clients in more than 175 countries.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.