IBM stock rises with higher price target – here’s what’s driving it

TLDR

• Bank of America raised its price target on IBM from $315 to $330, maintaining a buy rating, citing stronger potential for the second quarter and potential upside guidance for 2026.
• IBM stock rose 3.5% on Monday, reaching $300.82, to close at $299.58.
• Bank of America described IBM as a “leader in the quantum category,” boosting sentiment around its long-term growth story.
• IBM beat Q1 earnings and revenue estimates, reporting $1.91 per share versus the consensus of $1.81, with revenue rising 9.5% year over year.
• IBM also launched new z17 and LinuxONE 5 embedded systems on July 7, targeting data center space and cost pressures.

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Bank of America Securities raised its price target on IBM to $330 from $315 on Monday, reiterating a buy rating. The stock responded, rising 3.5% during the session to trade at $300.82, closing at $299.58, up from the previous close of $289.52.

International Business Machines Corporation, IBM

Trading volume was about 7 million, just below IBM’s average daily volume of 7.3 million.

Bank of America cited stronger potential for the second quarter, improved software mix, and the potential for IBM to raise its 2026 guidance. The bank also called IBM a “leader in the quantum category,” a designation that carries weight as investor interest in quantum computing continues to grow.

IBM Backed this up with real-world results. The company, in collaboration with Oak Ridge National Laboratory and the Cleveland Clinic, announced the first known quantum computer calculations associated with fusion materials, a tangible achievement, not just a roadmap promise.

IBM also recently announced a cybersecurity partnership with Deloitte and Red Hat, aimed at helping companies defend against automated cyberattacks. This step adds another layer to enterprise software and security positioning.

The analyst community is widely rated the stock. Of the 26 analysts covering IBM, 16 have buy ratings, one has a strong buy, and nine have a hold rating. The consensus price target is $306.47. Citigroup is the most bullish with a target of $375.

Wolfe Research is the outlier, downgrading to Peer Performance in late June, while Susquehanna initiated coverage with Neutral. Oppenheimer holds an outperformance but cut its target from $380 to $320 in April.

First quarter earnings gave ammunition to bulls

IBM’s recent quarterly results have given the stock a solid foundation heading into summer. The company reported first-quarter EPS of $1.91, beating the consensus of $1.81 by $0.10. Revenue was $15.92 billion versus expectations of $15.60 billion – an increase of 9.5% year over year.

The return on shareholders’ equity was 37.23%, and the net margin was 15.61%. Analysts expect full-year earnings per share to be $12.40. IBM The next earnings report is scheduled for July 22, where investors will want to see if AI-driven demand shows up in the numbers.

IBM also raised its quarterly dividend to $1.69 per share, up from $1.68. This works out to $6.76 per year, which represents a 2.3% return.

New devices target data center crisis

On July 7, IBM announced new configurations for its z17 and LinuxONE 5 systems, introducing rack-mount options for the first time across the full Z and LinuxONE portfolio.

The new systems support up to 82 cores and 18TB of memory, an approximately 20% increase in core count. It’s aimed at organizations dealing with tight data center space — CBRE data shows vacancy rates at record lows with rental rates exceeding $400 per kilowatt/month in some markets.

The z17’s single-frame and rack-mount configurations allow customers to co-locate IBM and non-IBM devices, providing increased deployment flexibility. LinuxONE Rockhopper 5 Express comes with 18 modules, making it a cost-effective entry point for smaller workloads.

Post-quantum cryptography is now standard on both z17 and LinuxONE Rockhopper 5 systems.