Analysts revamp IBM stock price target after AI-fueled new high originally appeared on TheStreet.
For investors looking beyond popular AI software names like Palantir, International Business Machines Corp. (IBM) is quietly becoming a stock to watch.
On June 18, IBM stock closed at a record $283.21. Year-to-date, the stock is up more than 27%.
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The 114-year-old company, once best known for mainframes and hardware, has spent the past few years transforming itself into a modern software and consulting business. It has focused on strategic acquisitions, exited low-growth and high-cost units, and rebalanced its business toward artificial intelligence, hybrid cloud, and enterprise automation.
Today, IBM sells software tools that help businesses build and manage AI systems, including WatsonX, its platform for creating and training AI models.
It also owns Red Hat, the open-source software giant it acquired in 2019, which plays a key role in its hybrid cloud strategy. Many of IBM’s clients are large enterprises and government agencies looking to streamline operations through AI and cloud technology.
IBM stock fell 6.6% on April 24 after its first-quarter earnings report but quickly recovered in the weeks that followed.
IBM reported revenue of $14.5 billion for the first quarter, up 1% from the prior year and slightly above analyst expectations. Adjusted earnings per share came in at $1.60, down 5% year over year.
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The tech giant warned of an “uncertain” operating environment, but reaffirmed its full-year outlook for 5% revenue growth and $13.5 billion in free cash flow, key for both dividends and possible future acquisitions.
“While no one is immune to uncertainty, we enter this environment from a position of relative strength and resiliency,” IBM CEO Arvind Krishna said during the April earnings call. “Our clients run the world’s most essential processes. Our diversity across businesses, geographies, industries, and large enterprise clients position us well to navigate the current climate.”
Bank of America analyst Wamsi Mohan has raised his price target for IBM to $320 from $290, reiterating a buy rating on the shares, according to a research note on June 18.
Despite trading at all-time highs, Mohan believes that IBM “remains interesting due to the transformational initiatives undertaken by management, positioning for growth in Gen AI, Agentic AI (and eventually quantum), and strong FCF driven by internal productivity initiatives.”