Bank of America has revised its price target for IBM to $175 per share ahead of the company's upcoming fourth-quarter earnings report, reflecting cautious optimism amid ongoing transformation efforts in cloud and AI infrastructure.
- Bank of America raised IBM's price target to $175 from $168
- IBM's fourth-quarter earnings are scheduled for February 1, 2026
- AI-related revenue grew 12% year-over-year and now represents 15% of software revenue
- Cloud infrastructure revenue increased 7% year-over-year in the latest quarter
- IBM’s stock trades at a 3.5% discount to its 52-week high of $184.35
- The managed infrastructure services spin-off is expected to close in early 2026
Bank of America has updated its price target for International Business Machines Corporation (IBM) to $175 per share, marking a strategic shift in its outlook just days before the company releases its fiscal 2025 fourth-quarter financial results. The adjustment reflects a reassessment of IBM’s near-term growth trajectory, particularly in its hybrid cloud and artificial intelligence segments, which remain central to the company’s long-term strategy. The firm maintains a 'Neutral' rating on the stock, underscoring a balanced view of risks and opportunities in the current market environment. The revised target represents a 4% increase from the prior $168 target, signaling incremental confidence in IBM’s ability to sustain revenue momentum despite macroeconomic headwinds. Analysts point to IBM’s recent quarter’s revenue growth of 2.3% year-over-year, driven by a 7% rise in its cloud infrastructure business, as a key factor supporting the upward revision. Additionally, the company reported a 12% year-over-year increase in AI-related revenue, which now accounts for roughly 15% of total software revenue, indicating progress in monetizing its AI portfolio. The move comes amid heightened investor focus on tech earnings season, with IBM’s performance expected to provide insight into broader trends in enterprise software and infrastructure spending. The upcoming earnings call will be closely watched for updates on IBM’s Watsonx platform adoption, fourth-quarter cash flow from operations, and guidance for fiscal 2026. Market participants are also assessing the implications of IBM’s ongoing restructuring, including the spin-off of its managed infrastructure services unit, which is set to close in early 2026. Shares of IBM (NYSE: IBM) have traded in a 52-week range of $158.20 to $184.35, and the revised price target positions the stock at a 3.5% discount to its 52-week high. While the Neutral rating suggests limited near-term upside, the increased target may support investor sentiment ahead of the earnings release on February 1, 2026.