Bernstein Raises International Business Machines (IBM) Target but Flags Full Valuation After Q4 Beat

International Business Machines Corporation (NYSE:IBM) is one of the 10 AI Stocks Gaining Attention on Wall Street. On January 30, Bernstein SocGen Group analyst Mark C. Newman raised the price target on the stock to $330.00 (from $280.00) while maintaining a “Market Perform” rating. The firm has flagged IBM’s full valuation despite its Q4 beat due to tougher comps ahead and an AI-driven sector risk.

Bernstein noted how IBM beat consensus expectations on revenue, earnings per share, and free cash flow in its latest quarterly report. The company anticipates profit margin expansion of about one percentage point and free cash flow of estimated $15.7 billion for FY26.

Its revenue growth and margin improvement expectations align with its full-year guidance for the first quarter of 2026. Further, IBM anticipates the closing of its Confluent acquisition by mid-2026, resulting in an estimated $600 PTI dilution in the second half of 2026. The acquisition is likely to be accretive to adjusted EBITDA in FY27 and to free cash flow in FY28.

Bernstein noted that IBM’s valuation appears full, particularly due to IBM’s heavy exposure to software and consulting, both of which are vulnerable to AI-driven devaluation. Nevertheless, IBM’s stock has remained resilient.

“Our updated SOTP analysis implies that part of the long-term upside from IBM’s nascent Quantum business is already in the stock.”

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.

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Disclosure: None. This article is originally published at Insider Monkey.