IBM shares are rising despite the sell-off: JPMorgan recommended buying them
JPMorgan Raises IBM Price Target and Bets on the Company's Growing Software Business / Photo: Erman Gunes / Shutterstock
JPMorgan has upgraded its rating on shares of tech veteran International Business Machines (IBM) from “neutral” to “buy” (Overweight), according to CNBC. It also raised its price target for the company’s stock from $270 to $291, implying a 15% increase from Monday’s closing price. Analysts saw “undervalued” opportunities in its growing software business.
Despite a broad sell-off in tech stocks, IBM shares were up 5.2% in premarket trading on June 23; after the U.S. market opened, their gains slowed slightly to 3%. Year-to-date, IBM shares are down nearly 15%.
“We are upgrading [IBM] to ‘Outperform’ with greater confidence in the acceleration of the company’s software segment in the second half of 2026… following a more detailed review of IBM’s software business. Software continues to deliver higher recurring revenue, margins, profitability, and free cash flow,” said bank analyst Brian Essex in a note on June 23.
What does the analyst see as the driver of growth?
Software development is becoming an increasingly powerful driver of the corporation’s growth: according to Essex’s calculations, this segment now accounts for approximately 45% of IBM’s revenue and about two-thirds of its consolidated profit. The investment bank views this shift toward software as a positive factor, given “the higher margins and revenue predictability of its software business, which is characterized by better cash conversion and a higher-quality revenue stream.” He added that this business commands a higher valuation multiple for IBM compared to its hardware and services segments.
Essex added that the company’s four main software focus areas—hybrid cloud computing, automation tools, transaction processing systems, and data solutions—can function as a “single flywheel” supporting investments in IBM’s infrastructure. “The stability of this engine is underestimated,” the JPMorgan analyst believes.
What Other Analysts Are Saying
On June 23, Morgan Stanley raised its price target for IBM shares from $225 to $267, while maintaining its “hold” recommendation (Equalweight rating). The bank’s price target implies a 6% increase in the company’s share price relative to the most recent closing price.
Overall, Wall Street analysts covering IBM stock have a positive outlook and recommend buying it: 14 out of 22 do so. Seven advise holding it in a portfolio, and only one recommends selling it.
This article was AI-translated and verified by a human editor
