While International Business Machines’ (IBM) position in the computing market has changed of late, and not always for the better, there is still some opportunity to be found therein. At least, that is the impression that Oppenheimer analysts came away with, based on a CNBC report. That was good enough news for investors, who sent IBM shares up over 2% in Tuesday afternoon’s trading.
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One of IBM’s biggest moves, an increased focus on software over hardware, is set to give it a big advantage in the field. That is the view from Param Singh, Oppenheimer analyst, who started coverage of IBM with an Outperform rating and a price target of $320 per share. That is a pretty optimistic target, too; it represents roughly 28% over what IBM closed at just yesterday.
But Singh expects further growth to continue, as the market starts to catch that Big Blue is no longer about Big Iron, so much as it is about Big Software. In fact, Singh looks for IBM to “…re-rate higher, in our view, and trade closer to the comparable average given the pivot / growth in its software portfolio, inflection in consulting growth, and expanding gross and pre-tax margins.” IBM’s increasing focus on artificial intelligence (AI) will likely help it as well.
Gaining From DeepSeek
While a lot of stocks were losing ground from the arrival of the Chinese AI platform known as DeepSeek R1, IBM actually looks to gain. In fact, recently, IBM had its best day in nearly a quarter of a century, reports noted, thanks in large part to DeepSeek.
So what did IBM gain from DeepSeek’s debut? John Furrier, a research analyst, noted: “There’s a class of companies … that their entire value proposition of their bet for their AI strategy is kind of confusing. But a lot of smart people, like Arvind [Krishna] over at IBM, Matt Hicks, who’s the CEO of Red Hat, which is now part of IBM, companies that are in this position where they have this bet and their strategy that’s hard to tell was completely unpacked by DeepSeek.”
Is IBM a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on IBM stock based on seven Buys, six Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 41.43% rally in its share price over the past year, the average IBM price target of $260 per share implies 6.9% upside potential.
