Wedbush raises IBM (IBM.US) target price to $350: AI brings "incremental positives", potential of quantum computing still underestimated

IT giant IBM became the focus of the market on Tuesday, with Wedbush Securities raising its target price and stating that artificial intelligence is bringing "incremental positives" to the company. However, IBM's stock price fell in pre-market trading, down 2.4% at the time of writing. According to Wedbush analysts in a report to clients, "Based on our recent research, IBM's product portfolio in areas such as AI, hybrid cloud, automation, and network security continues to show strong growth momentum. Customers are seeking trusted, scalable, and compliant solutions that can be deployed in complex environments. As more enterprises launch large-scale AI applications, IBM's ability to integrate software, consulting, and infrastructure into a complete technology stack remains a key advantage in its business engine." Analysts noted that IBM is focused on building a data moat, including its $11 billion acquisition of Confluent, which is a strategic move. Enterprises are looking to extract more value from their existing data environments while increasing data processing capabilities in the hybrid cloud ecosystem, and IBM is trying to provide end-to-end integration between applications, analytics, data systems, and AI agents. Additionally, IBM has already realized $4.5 billion in productivity gains, a figure that does not yet include the savings brought by IBM Bob. The company continues to focus on internal investments to drive operational leverage at scale. Wedbush raised IBM's target price from $320 to $350 and reiterated its "outperform" rating. Before this target price increase, IBM's stock price had risen over 7% on Monday, including reasons such as an old news story about U.S. President Trump being recirculated online, and Barclays PLC Sponsored ADR initiating coverage on IBM with a "hold" rating. In addition to the positive factors related to AI mentioned earlier, analysts also pointed out that IBM's positioning in the field of quantum computing seems to still be "underestimated" by investors. The analysts explained, "The company is at the earliest stages of unlocking the dividends at the intersection of AI and quantum computing. IBM has stated that quantum advantage will be achieved this year. According to IBM's estimates, quantum computing will create a trillion-dollar value engine in the next ten years, with quantum technology providers accounting for approximately 20% of the market. Since launching the Quantum Partner Program, IBM has signed over $1 billion in contracts. IBM's quantum strategy is to maintain its leadership position in the quantum computing infrastructure field by providing a runtime environment with quantum capabilities. We believe that IBM's positioning in the forefront of AI and quantum is still underestimated by the market." IBM recently disclosed that it will invest $10 billion in quantum computing over the next five years. In addition to this investment, the U.S. federal government has signed a letter of intent with IBM to jointly build a quantum chip factory on U.S. soil.