The upgrade reflects IBM’s shift toward higher-margin software, now driving nearly two-thirds of profits amid AI integration.
JPMorgan upgraded IBM to Overweight and raised its price target to $291 from $270, citing the company’s software business as the primary growth driver. The firm highlighted IBM’s software segment, which accounts for 45% of revenue and nearly 66% of profits, as a key margin expansion catalyst.
IBM’s pivot from hardware to software and hybrid cloud has reshaped its revenue mix over the past decade. The upgrade follows a separate AI-related partnership announcement, reinforcing investor confidence in IBM’s ability to monetize artificial intelligence trends.
The stock’s performance is increasingly tied to software margins rather than legacy hardware sales, reducing sensitivity to server business fluctuations. Analysts view IBM as a test case for legacy tech firms transitioning to AI-driven recurring revenue models.