JPMorgan Raises IBM Target as Software Growth Drives Q4 Outlook

International Business Machines Corporation (NYSE:IBM) is included among the 12 Best Dow Jones Dividend Stocks to Buy According to Hedge Funds.

On January 21, JPMorgan raised its price target on International Business Machines Corporation (NYSE:IBM) to $312 from $290 and kept a Neutral rating on the stock. The firm expects IBM to post “solid” fourth-quarter results, driven by faster growth in software. Strength in automation and Red Hat is expected to help as transaction processing activity begins to recover. That said, JPMorgan cautioned that much of this optimism already appears to be reflected in the share price at current levels.

Picking clear winners in AI is still messy, but IBM has carved out a lane that plays to its strengths. It has already lined up $9.5 billion in AI-related business, most of it tied to consulting rather than pure software. That is by design. IBM spotted early that companies rolling out AI need hands-on help to make it work inside real businesses, not just tools. As AI adoption spreads, that services-heavy angle puts IBM in a good spot, especially as AI consulting becomes a much larger market.

At the same time, the company is keeping its eyes on the long game with quantum computing. IBM expects to demonstrate quantum advantage this year and is targeting a fault-tolerant quantum computer by 2029, a key step toward real-world use. From there, it plans to scale systems in the early 2030s. The payoff is still years away, but if quantum computing grows into the massive market many expect, IBM wants to be right in the middle of it.

International Business Machines Corporation (NYSE:IBM) provides global hybrid cloud and artificial intelligence capabilities, along with consulting services for enterprises worldwide.

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.

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Disclosure: None.