Key Takeaways
- Barclays launched coverage of IBM with an Overweight rating and set a $350 price target on Monday morning.
- Shares jumped approximately 11-12% in premarket trading, reaching around $330.
- The optimistic outlook focuses on IBM’s software division, which accounts for nearly half of revenue and most profitability.
- Analyst Raimo Lenschow from Barclays contends that IBM’s infrastructure software caters to large, regulated organizations — establishing a “sticky” client base resistant to AI-driven disruption.
- This upgrade comes amid strong momentum: IBM shares have climbed 28% in the last month and recorded their best weekly performance in a quarter-century.
IBM shares experienced a significant surge on Monday following a bullish initiation from Barclays — and surprisingly, quantum computing wasn’t the catalyst.
International Business Machines Corporation, IBM
Shares of IBM jumped approximately 11% during premarket hours, hitting $330.11, after Barclays analyst Raimo Lenschow launched coverage with an Overweight rating and established a $350 price target. This projection suggests an additional 17.5% potential gain from premarket levels.
The technology giant has been experiencing remarkable momentum. IBM has advanced 28% in the past month and recently recorded its most impressive weekly performance in 25 years. Big Blue investors have had plenty to celebrate recently.
While quantum computing has dominated recent headlines — IBM secured $1 billion in federal CHIPS and Science Act funding to construct a dedicated quantum chip foundry, then committed over $10 billion of its own capital toward quantum research and production over the coming five years — Lenschow’s investment thesis looks elsewhere.
The Enterprise Software Thesis
His argument is more straightforward: IBM has transformed into a software powerhouse, and the market hasn’t fully recognized this shift.
Software accounts for nearly half of IBM’s total revenue while generating the lion’s share of corporate profits. Lenschow anticipates this mix will expand over time given software’s superior growth characteristics.
The critical element of his analysis centers on the type of software IBM provides. This isn’t consumer-facing applications or fashionable AI tools. Instead, it’s core infrastructure — Red Hat Enterprise Linux, Red Hat OpenShift, automation solutions, and data and analytics platforms — designed specifically for large, sophisticated enterprises operating hybrid cloud and on-premises systems.
These clients will never migrate entirely to the cloud, Lenschow observes. This dynamic creates a secure, predictable revenue stream that’s challenging to replace.
“We see mid single digit organic revenue growth and ongoing margin leverage, which should create a stable earnings compounder with a Quantum option,” he stated.
A Growing Consensus
Lenschow isn’t breaking new ground with this perspective. Oppenheimer analyst Param Singh employed similar terminology in January, characterizing IBM’s software offerings as “sticky.” Evercore ISI’s Amit Daryanani reinforced this view in February. Then in April, Citi Research’s Fatima Boolani described IBM’s software and hardware as deeply embedded “across the most critical points of the world’s largest, most complex IT infrastructures.”
This convergence of analyst sentiment reflects a clear investment narrative gaining momentum: IBM’s enterprise software foundation isn’t a weakness — it’s a strategic advantage.
Additionally, social media activity has contributed to the buzz. Remarks from Donald Trump in December praising IBM’s chief executive have reemerged online, circulating alongside conversations about other occasions where the president has publicly mentioned particular stocks in 2025.
The overall Wall Street perspective remains measured. Among analysts currently tracking IBM, 10 rate it as Buy while 11 recommend Hold — yielding a Moderate Buy consensus. The mean price target stands at $291.69, indicating shares may be appropriately valued at present levels following the recent rally.
IBM’s latest quarterly report demonstrated continued strength in the software segment, with the company emphasizing hybrid cloud and AI integration throughout its enterprise customer portfolio.
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