IBM’s recent market drop after its latest earnings created some uncertainty for investors, but several respected analysts are confident in the company’s future. IBM actually posted better-than-expected revenue and adjusted earnings this quarter, yet its stock tumbled, mostly due to concerns about slowing software sales. Despite this, analysts like those from Melius Research believe the sell-off is an overreaction. They point out that IBM is entering a strong mainframe upgrade cycle with its new z17 system, which should support future growth. IBM’s Red Hat business, known for cloud solutions, showed impressive growth, and analysts expect this momentum to boost IBM’s valuation in the coming years.
Looking ahead, optimism remains high. Wedbush analysts still rate IBM as “Outperform” and maintain a $325 price target. They see big opportunities for IBM as more businesses turn to artificial intelligence and hybrid cloud solutions to run their operations more efficiently. Even Bank of America, while nudging its price target slightly down, stresses that IBM’s powerful software segment could soon start exceeding expectations, especially as companies invest more in automation and cutting-edge tech.
IBM’s CEO is upbeat about technology’s role in driving productivity globally. The company’s hybrid cloud and AI service revenue remains strong, and its consulting arm, though facing short-term headwinds, has built up an impressive order backlog. The potential for future acquisitions also offers room for additional growth.
Most analysts tracking IBM predict the company’s free cash flow will keep rising, and they estimate that IBM could add at least 25% to its market value over the next three years. Factoring in IBM’s steady dividends, investors might see closer to 35% total returns if the company keeps executing well. Despite some caution around consulting and software, the broad consensus is that IBM’s focus on hybrid cloud, AI, and mainframe upgrades puts it in a strong position to benefit from the next wave of technology spending.
