Shares of IBM surged over 4% in premarket trading Tuesday after JPMorgan upgraded the stock, citing accelerating software growth and emerging AI demand. The jump came despite a sharp sell-off in broader markets, with Nasdaq futures down 2.66% and S&P 500 futures off 1.30%.
JPMorgan analyst Brian Essex raised IBM to Overweight from Neutral and lifted the price target to $291 from $270. Essex pointed to expectations for software revenue acceleration in the second half of 2026, driven by Red Hat, OpenShift migrations, and automation demand following the HashiCorp acquisition. Software now makes up roughly 45% of IBM’s revenue but delivers nearly two-thirds of consolidated profit, a mix shift the analyst called “positive” due to higher margins and better cash conversion.
The bullish note was joined by Morgan Stanley, which increased its IBM price target to $267 from $225 while keeping an Equal Weight rating. The firm noted that enterprise server demand remains stronger than expected, and raised earnings estimates by 5-6% for computing-exposed companies.
Adding to the momentum, President Trump signed two executive orders on Monday to accelerate quantum computing development and mandate post-quantum cryptography by 2031. IBM CEO Arvind Krishna attended the Oval Office signing. Trump later quipped he regretted selling his IBM stock too early. IBM has already secured over $1.1 billion in quantum customer contracts since 2017 and committed $10 billion over five years to quantum research and manufacturing. Essex highlighted that any pull-forward of IBM’s Starling quantum system timeline could provide further upside.
IBM also joined OpenAI’s Daybreak Cyber Partner Program and launched an AI-powered application security service. With Q2 earnings expected on July 22—forecast at $3.00 per share, up from $2.80 a year ago—Wall Street remains broadly bullish, with Citigroup ($375 target), Wedbush ($320), and Barclays ($350) all at Buy-equivalent ratings.
