Wall Street Analysts Boost Outlook on IBM’s Strategic Shift

IBM shares advanced 1.19% to $294.97 on Monday, buoyed by a notably more optimistic stance from two major Wall Street institutions. The simultaneous upgrades reflect growing confidence in the technology giant's ongoing transformation and its pivot toward software and hybrid cloud solutions.

Leading the charge, Jefferies analyst Brent Thill upgraded his rating on IBM from "Hold" to "Buy." He also raised his price target substantially, moving it from $300 to $360 per share. This new target implies a potential upside of approximately 22% from current levels. In his assessment, Thill points to IBM's "clearer path to software acceleration" as a primary catalyst. He highlighted the momentum in the Red Hat business unit and anticipated synergies from recent strategic acquisitions, specifically naming HashiCorp and the planned $11 billion acquisition of Confluent.

RBC Capital Markets echoed this positive sentiment. Analyst Matthew Swanson reaffirmed his "Outperform" rating on the stock and increased his price objective to $350. Both firms identified an improving IT spending environment and rising demand for artificial intelligence (AI) as significant tailwinds for IBM's portfolio of hybrid-cloud and automation offerings.

The Strategic Rationale Behind the Confluent Deal

The planned acquisition of Confluent, valued at $31 per share, is expected to close by mid-2026. Market experts largely view this move as a critical strategic piece. Real-time data streaming technology is considered an essential component for deploying enterprise-scale AI. While some concerns exist regarding near-term earnings dilution, the consensus among analysts is that the long-term revenue contribution to IBM's software segment is the more compelling argument.

Should investors sell immediately? Or is it worth buying IBM?

From a valuation perspective, IBM trades at a projected 2026 price-to-earnings (P/E) ratio of around 23. This places it notably below the average multiple of approximately 35 for large software peers. Jefferies interprets this discount as a margin of safety for investors.

Upcoming Earnings and Technical Position

Investor attention now turns to IBM's fourth-quarter earnings report, scheduled for January 28, 2026. Consensus estimates project earnings per share of $4.33, which would represent a year-over-year increase of 10.5%. The market will likely focus on any updates regarding the regulatory approval process for the Confluent acquisition and on organic growth metrics for Red Hat.

On the technical front, IBM's stock is trading near multi-year highs. The newly established analyst price targets suggest a potential breakout above the psychologically significant $300 threshold could be on the horizon.