RBC Calls International Business Machines Corporation (IBM) a Defensive AI Play as Red Hat Headwinds Ease

International Business Machines Corporation (NYSE:IBM) is one of the AI Stocks in Focus on Wall Street. On January 27, RBC Capital analyst Matthew Swanson reiterated an Outperform rating on the stock with a $350.00 price target. The firm favors IBM’s secular positioning ahead of its earnings report on January 28.

RBC anticipates that IBM will report solid results with upside to overall revenue and free cash flow. With earnings due today, investors will be particularly watching out if the company can maintain its recent momentum.

In particular, the firm mentioned how the subcomponents of software revenue will remain in focus. Management had noted how Red Hat will continue to face pressure throughout the year, but this weakness is expected to ease and will allow for growth to pick up again in fiscal 2026.

Overall, RBC Capital continues to like IBM as a defensive AI play, maintaining its Outperform rating on the stock.

“We continue to like IBM as a defensive play with secular exposure to hybrid, AI and a longer-term opportunity in quantum. We maintain our OP rating and $350 PT.”

International Business Machines Corporation (NYSE:IBM) is a multinational technology company and a pioneer in artificial intelligence, offering AI consulting services and a suite of AI software products.

While we acknowledge the potential of IBM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 10 AI Stocks on Market Radar and 10 AI Stocks Analysts Are Watching

Disclosure: None.