Street View: IBM flexes its AI muscles as Wall Street sees steady giant in motion

IBM IBM.N beat Wall Street estimates for fourth-quarter results on Wednesday, as the rapid adoption of AI boosted demand for its software services

Shares of co rise nearly 8% to $317.71 premarket

SLOW DRIP, STRONG BREW

J.P. Morgan ("neutral", PT: $317) says IBM’s data outperformance was described as seasonal, driven by ELA, with growth expected to return to lower levels next year

However, co remains a relatively defensive name, with increasingly favorable exposure to software and AI tailwinds, JPM adds

Morgan Stanley ("equal-weight", PT: $304) says IBM’s strong quarter was partly supported by increased customer financing, while near‑term hardware faces some risks

Adds its latest enterprise mainframe, z17, is still expected to be one of the strongest mainframe cycles in decades

RBC Capital Markets ("outperform", PT: $361) says Red Hat, IBM’s open‑source software unit, saw its growth slow during the quarter due to softer demand for its subscription‑based services and a tougher federal‑sector environment, but it is still expected to grow low-double-digits in FY/26

Morningstar (fair value: $325) expects a stronger secular tailwind for IBM’s software business as enterprises expand their AI infrastructure footprint, supporting its 9% software growth forecast over the next five years