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In recent days, Jefferies upgraded International Business Machines to Buy, highlighting its strengthening software business, recent and pending acquisitions such as HashiCorp and Confluent, and efforts to monetise generative AI through watsonx.
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At the same time, IBM’s push into quantum computing and AI, including its partnership to integrate Anthropic’s Claude model, is reshaping how investors view the company’s longer-term technology positioning.
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We’ll now examine how Jefferies’ confidence in IBM’s software momentum and AI monetisation potential may influence the company’s investment narrative.
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To own IBM today, you need to believe in its pivot toward higher-margin software, hybrid cloud and AI as the core of the investment case, while watching how quickly these newer streams can offset pressures in more cyclical consulting work. Jefferies’ upgrade reinforces that software and AI momentum is the key near term catalyst, but it does not materially change the main risk: a macro slowdown that could still weigh on consulting and consumption-based software demand.
Among recent announcements, the partnership to embed Anthropic’s Claude model into IBM’s software portfolio stands out as most relevant. It directly supports the AI monetisation theme behind Jefferies’ call by broadening watsonx use cases and strengthening IBM’s position with enterprise clients that are already testing AI driven workloads. This sits alongside acquisitions such as HashiCorp and the pending Confluent deal as important proof points for investors focused on software-led growth and recurring revenue.
Yet despite this momentum, investors should be aware that IBM’s high debt load and the cost of acquisitions could still…
Read the full narrative on International Business Machines (it’s free!)
International Business Machines’ narrative projects $74.4 billion revenue and $10.5 billion earnings by 2028. This requires 5.1% yearly revenue growth and an earnings increase of about $4.6 billion from $5.9 billion today.
Uncover how International Business Machines’ forecasts yield a $293.89 fair value, a 3% downside to its current price.
Some of the lowest ranked analysts were assuming IBM’s revenue would reach about US$73.3 billion and earnings US$8.8 billion by 2028, which is far more cautious than consensus and underlines how much skepticism remains about AI and software offsetting legacy pressures and rising compliance costs, so it is worth weighing these views against the latest AI and quantum news to see how your own expectations compare.
Explore 16 other fair value estimates on International Business Machines – why the stock might be worth as much as 16% more than the current price!
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include IBM.
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