IBM Shares Surge 34.7% in 2025 Driven by AI Business Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 07 2026
0mins
Should l Buy IBM?
Source: Fool
- Outstanding Stock Performance: In 2025, IBM's stock surged 34.7%, significantly outperforming the S&P 500, reflecting the company's strong performance in AI and quantum computing, which bolstered investor confidence.
- AI Business Growth: By the end of Q3 2025, IBM's AI business book nearly doubled from $5 billion in 2024 to $9.5 billion, indicating robust demand for AI solutions among enterprise clients and prompting an upward revision in the company's full-year revenue outlook.
- Quantum Computing Prospects: IBM's 2025 quantum computing roadmap anticipates the launch of large-scale fault-tolerant quantum computers by 2033 and beyond, potentially revolutionizing fields like materials science and drug discovery, thereby enhancing the company's leadership in high-tech sectors.
- Cash Flow Outlook: IBM expects to generate $14 billion in free cash flow in 2025, and despite economic uncertainties, the strong growth in its AI business is set to support future cash flow increases, enhancing the company's long-term investment appeal.
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Analyst Views on IBM
Wall Street analysts forecast IBM stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for IBM is 315.80 USD with a low forecast of 210.00 USD and a high forecast of 375.00 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.
16 Analyst Rating
11 Buy
4 Hold
1 Sell
Moderate Buy
Current: 289.890
Low
210.00
Averages
315.80
High
375.00
Current: 289.890
Low
210.00
Averages
315.80
High
375.00
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.
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- Technological Breakthroughs and Market Competition: IonQ achieved 99.99% 2-qubit gate fidelity last year, representing a 10 billion times improvement over past standards, and despite competition from tech giants like Alphabet and IBM, IonQ's advancements in quantum computing technology remain significant.
- Financial Status and Profitability Challenges: IonQ reported $68 million in revenue for the first nine months of 2025, a 117% increase year-over-year, yet it faces $406 million in operating losses, highlighting severe profitability challenges, and with less than $1.1 billion in liquidity, it may need to dilute shares or incur debt to sustain operations.
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See More
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- Infrastructure Demand Surge: Fluor is expected to see a nearly 4% revenue decline in 2024, yet the urgency of infrastructure projects makes investing in FLR stock appealing, particularly as the demand for nuclear facility construction is set to triple by 2050 in the U.S.
- Cybersecurity Market Expansion: Palo Alto Networks reported a record 3,322 data breaches in 2022, a 79% increase from 2020, highlighting strong demand for its cybersecurity services, with projected revenue growth of 14% this year and 13% next year, indicating sustained market leadership.
- IBM's AI Transformation: IBM achieved a 12% year-over-year revenue growth last quarter, primarily driven by sales of AI-capable mainframes and software, particularly strong in automation and data management, showcasing its enhanced competitiveness in the artificial intelligence race.
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See More
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See More
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- Significant Revenue Growth: In Q3 of fiscal 2026, UiPath reported revenue of $411 million, a 16% year-over-year increase, with annual recurring revenue (ARR) hitting $1.78 billion, up 11%, showcasing robust performance in the SaaS sector.
- Expanding Customer Base: The number of customers with ARR over $100,000 grew by 12% to 2,506, while those exceeding $1 million increased by 10% to 333, reflecting UiPath's appeal and market penetration among high-value clients.
- Strong Cash Flow and Debt Position: The company saw free cash flow rise by 8.2% to $25.11 million, with a net cash position of $744.1 million and total debt of only $82 million, indicating solid financial health despite not yet achieving net profitability, suggesting strong future growth potential.
See More
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- Market Potential: Research from McKinsey indicates that the quantum technology market could reach nearly $100 billion annually over the next decade, with quantum computing being the largest segment, highlighting significant investment appeal.
- Microsoft's Quantum Strategy: Microsoft's development of a quantum processing chip aims to scale quantum computer systems to 1 million qubits, far exceeding the current maximum of over 6,000 qubits, which could unlock new capabilities for its cloud and AI businesses.
- IBM's Quantum Development: IBM is a leading player in quantum computing, having generated over $1 billion from this sector, despite it being a minor part of its overall business, showcasing its commercial potential in the field.
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See More
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- Tech Stock Influence: This milestone was largely driven by strong performances from technology stocks, particularly Nvidia's replacement of Intel, highlighting the market's heightened focus and investment enthusiasm in the artificial intelligence sector.
- Market Rebound: Following a downturn in 2022, the Dow rebounded nearly 13% in 2023, with this breakthrough occurring against the backdrop of the index climbing over 1,100 points, demonstrating a robust market recovery.
- Changing Economic Landscape: Despite concerns over Trump's tariff policies and the impact of AI spending, the market has shown resilience, indicating investor optimism regarding future economic growth.
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