IBM (IBM) has provided a strong update about its long-term revenue growth outlook at its Investor Day event on February 4. CFO James Kavanaugh said that IBM anticipates annual sustainable sales growth of over 5% in the coming years, driven by the expansion of its Software division. This exceeded analysts’ 4% forecasts for FY26 and FY27. Following the update, IBM stock gained 1.4% on Tuesday and hit a new 52-week high of $265.25 per share.
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Importantly, IBM anticipates double-digit annual revenue growth in its Software unit. The upside will be driven by the strong performance of Red Hat, a subsidiary of IBM that provides open-source software products, and its growing artificial intelligence (AI) business.
Also, the Infrastructure segment is likely to grow modestly by 1%-3%, with future revenue support from quantum computing. Further, the company expects its Consulting business will grow ahead of the market, aided by rising demand for AI and digital transformation services.
Top Analysts Remain Bullish on IBM Stock
Following the release of IBM’s Q4 earnings on January 29, six Top-rated analysts reiterated a Buy rating on IBM stock. The company’s earnings per share came in at $3.92, which beat analysts’ consensus estimate of $3.78 per share. Also, sales climbed 1% year-over-year to $17.55 billion and came in line with estimates.
Among the bullish analysts, Wedbush analyst Daniel Ives sees strong growth in the next 12 to 18 months. Also, he believes that IBM is well-positioned for major AI advancements under CEO Arvind Krishna’s leadership.
Is IBM a Buy, Hold, or Sell?
On TipRanks, IBM stock has a Moderate Buy consensus rating based on six Buys, six Holds, and one Sell assigned in the last three months. At $252.69, the average IBM price target implies about 4.45% downside potential.
