Barclays has allowed IBM's stock to rise 50%. This is a bet not only on quantum computing

Barclays started covering shares of software and server equipment manufacturer IBM with recommendation "buy" (Overweight rating), writes Barron's. Analysts of the investment bank set the target price of the company's securities at $350, which implies the potential for growth of 17.4% relative to the last closing. But in an optimistic scenario, Barclays expects IBM's quotes to reach $449, or 51% higher than the current ones, CNBC reports.

On June 1, the company's shares were up 9.5%. They were also supported by the presentation of a new PC chip from Nvidia. If this growth continues, the company's capitalization will exceed $300 billion for the first time, Barron's estimates.

IBM has made a massive leap into the quantum computing market, and investors could benefit from its investment in this futuristic technology, CNBC notes. The company has a compelling opportunity in this area, which could accelerate its growth, wrote a team of Barclays analysts led by Raimo Lenschow. They forecast organic revenue growth for IBM of a few percent a year and further improvement in profitability.

In the middle of Ma it became known that the U.S. government will allocate $2 billion to nine companies engaged in quantum computing. Half of this amount will go to IBM - for the construction of a separate quantum factory. That week its shares soared more than 17% - the strongest in 25 years. And on Ma 28, the manufacturer announced an investment of more than $10 billion in quantum research, development and manufacturing over the next five years. It expects to build an error-resistant quantum computer by 2029.

"Quantum computing has the potential to be the next major stage in the development of computing technology after the eras of central processing units and graphics gas pedals (...) And IBM is already one of the leaders in this field," Lenschow noted. He believes the company has an opportunity to cement its position as a pioneer. According to the research firm Grand View Research, in 2024 this market was estimated at only $1.4 billion, but it is growing rapidly and attracting huge interest from investors and developers.

That said, Lenshaw Lenshaw recalled another aspect. In his estimation, IBM infrastructure software is focused on large customers from highly regulated industries. This creates an extremely loyal customer base that is not in danger of being displaced by artificial intelligence, he believes.

Other analysts are also betting on IBM's software. Back in January, Param Singh of Oppenheimer called the company's software portfolio "sticky," meaning that customers continue to use its products even when there are alternatives, Barron's recalls. In February, this position was supported by Evercore ISI analyst Amit Daryanani, and in April, Citi Research analyst Fatima Bulani wrote that IBM software and hardware are deeply embedded in the most important elements of the world's largest and most complex IT infrastructures.

Melius Research analyst Ben Reitzes wrote on Monday, June 1, that "the quantum hype train has already left the station." However, he also still sees the software business, particularly Red Hat's enterprise software division, as the main driver for the company's stock. According to Reitzes, the proliferation of AI applications could return Red Hat to double-digit revenue growth, a scenario that few people are currently expecting.

Wall Street is generally optimistic about IBM's prospects, with 14 of the 24 analysts covering its securities advising to buy them. Eight take a neutral stance, while two advise selling.

This article was AI-translated and verified by a human editor