JPMorgan Upgrades IBM on Software Growth Potential
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Source: CNBC
- Software Business Growth: JPMorgan analysts highlight that IBM's software segment accounts for approximately 45% of the company's revenue and contributes about two-thirds of consolidated profit, underscoring its critical role in driving business growth.
- Investment Rating Upgrade: JPMorgan upgraded IBM's investment rating from neutral to overweight and raised its price target from $270 to $291, implying a 15% upside from Monday's close, reflecting increased confidence in IBM's future performance.
- High Margin Advantage: Analysts emphasize that the high-margin and stable cash flow characteristics of the software business position it as IBM's core growth engine, with expectations for accelerated growth in the second half of 2026, further enhancing profitability.
- Market Consensus Support: According to LSEG data, of the 25 analysts covering IBM, 15 have a buy or strong buy rating, indicating a generally optimistic outlook for IBM's future performance, despite the stock having fallen nearly 15% year-to-date.
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Analyst Views on IBM
Wall Street analysts forecast IBM stock price to rise
16 Analyst Rating
11 Buy
4 Hold
1 Sell
Moderate Buy
Current: 249.100
Low
210.00
Averages
315.80
High
375.00
Current: 249.100
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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- High Margin Advantage: Analysts emphasize that the high-margin and stable cash flow characteristics of the software business position it as IBM's core growth engine, with expectations for accelerated growth in the second half of 2026, further enhancing profitability.
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- Surging Restructuring Costs: The company reported restructuring expenses of $1.8 billion, a substantial increase from $374 million the previous year, indicating the financial strain associated with layoffs and other exit costs.
- Negative Cash Flow Impact: Oracle's free cash flow for the last fiscal year was negative $23.7 billion, while capital expenditures surged by 162% to $55.7 billion, raising concerns about its future investment capacity and market confidence.
- Significant Industry Trends: Oracle's layoffs align with similar actions taken by other tech giants like Meta, Google, and Microsoft, highlighting the profound impact of AI technologies on the industry and suggesting that more companies may face comparable challenges.
See More
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- Software Business Growth: JPMorgan analysts highlight that IBM's software segment accounts for approximately 45% of the company's revenue and contributes about two-thirds of consolidated profit, underscoring its critical role in driving business growth.
- Investment Rating Upgrade: JPMorgan upgraded IBM's investment rating from neutral to overweight and raised its price target from $270 to $291, implying a 15% upside from Monday's close, reflecting increased confidence in IBM's future performance.
- High Margin Advantage: Analysts emphasize that the high-margin and stable cash flow characteristics of the software business position it as IBM's core growth engine, with expectations for accelerated growth in the second half of 2026, further enhancing profitability.
- Market Consensus Support: According to LSEG data, of the 25 analysts covering IBM, 15 have a buy or strong buy rating, indicating a generally optimistic outlook for IBM's future performance, despite the stock having fallen nearly 15% year-to-date.
See More
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- Layoff Scale: Oracle has reduced its workforce by 21,000 positions, representing nearly 13% of its total employees, bringing the current count to 141,000 from 162,000 last year, indicating significant adjustments due to AI technology deployment.
- Surging Restructuring Costs: The company reported restructuring expenses of $1.8 billion, a substantial increase from $374 million the previous year, reflecting the financial strain imposed by layoffs and the associated costs.
- Productivity Impact: Oracle acknowledged that layoffs could lead to decreased productivity, damaged employee morale, and shortages of skilled workers in critical roles, highlighting the challenges and risks faced during its transformation.
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