IBM (NYSE: IBM) reported upbeat earnings for the fourth quarter. Here are the key analyst insights:
- Wedbush analyst Dan Ives reaffirmed an Outperform rating, while raising the price target from $325 to $340.
- Goldman Sachs analyst James Schneider reiterated a Buy rating, while lifting the price target from $350 to $365.
The company is "developing strategic partnerships with key data providers to drive a multiplier effect for growth," Ives said. IBM's GenAI business continued to gain momentum, with backlogs reaching $12.5 billion. That's significantly higher than the previous quarter's $9.5 billion. Ives credits that to the strong demand for IBM's AI agents.
Management guided fiscal 2026 revenue growth of 5% in constant currency, as the company increases focuses on its software vertical, which is expected to grow 10% in the year, the analyst stated.
"We believe IBM remains well-positioned to ride the wave of AI demand as its diversified portfolio and offerings combined with M&A growth synergies fuel its momentum," he further wrote.
Goldman Sachs: IBM reported better-than-expected revenues and non-GAAP gross margin of 61.8%, above consensus of 61.3%, Schneider said. The company's earnings from continuing operations of $4.52 per share came in well above Street expectations of $4.30 per share.
IBM recorded strong Generative AI backlog of $12.5 billion, up about $3.0 billion sequentially, the analyst stated. "We believe the company is on track to complete its pivot to long-term growth fueled by improving software growth and long-term market share gains in Consulting," he further wrote.
IBM Price Action: Shares of IBM had risen by 5.97% to $311.72 at the time of publication on Thursday.