As big AI companies face pressure over high prices and slowing demand, investors are starting to look at less-hyped tech stocks for growth opportunities. As a result, IBM has been gaining attention as it works on a turnaround plan. In fact, its stock is up 19% so far this year. Furthermore, five-star Bank of America analyst Wamsi Mohan recently told CNBC that he thinks IBM can meet its goals.
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Indeed, Mohan pointed out that IBM has sold off the parts of its business that weren’t growing and put money into areas that are. And while some investors are unsure whether or not IBM can hit its target of over 5% growth this year, especially since last quarter only saw 2% growth, Mohan thinks it is possible. He said this could happen thanks to a new mainframe product launch, which remains more important to IBM’s business than many people realize. Because of these changes, Mohan said he is “very bullish” on IBM.
It is also worth noting that IBM has been getting a boost from its AI business, as its AI products and services passed $5 billion in total bookings by the end of Q4, with $2 billion added just last quarter. In addition, IBM made its Granite AI models for businesses much cheaper to run last year and about 90% more efficient than larger models. Moreover, the company is seeing growing interest in its Red Hat-based AI platforms, including RHEL AI, OpenShift AI, and watsonx, which are helping move its AI strategy forward.
What Is the Target Price for IBM?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on IBM stock based on eight Buys, five Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average IBM price target of $260.62 per share implies 0.9% upside potential.
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