JPMorgan Upgrades IBM on Software Outlook
JPMorgan Upgrades IBM, citing software acceleration and AI adoption and raising its $291 target, saying software strength could support a stock re-rate.
KEY TAKEAWAYS
- JPMorgan upgraded IBM to Overweight and raised its price target to $291.
- The analyst cited greater confidence in software growth and AI adoption as drivers of margins and cash conversion.
- Software was reported as about 45.0% of revenue and responsible for nearly two-thirds of profit.
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JPMorgan upgraded IBM on June 23, 2026, citing confidence in the company’s software business and potential AI adoption as drivers for a higher price target. The firm said these factors could improve margins, cash flow, and earnings quality.
Upgrade and Price Target
JPMorgan analyst Brian Essex raised IBM to Overweight from Neutral and increased the price target to $291 from $270. The upgrade came during a broad technology sector selloff and contributed to IBM’s relative outperformance.
Software Growth and AI Outlook
The upgrade emphasized greater confidence in IBM’s software growth and acceleration, highlighting software’s higher margins, more predictable revenue, and stronger cash conversion compared with hardware and services. The software segment accounts for about 45% of IBM’s revenue and nearly two-thirds of its profit. Key areas supporting this outlook include hybrid cloud, automation, transaction processing, and data.
JPMorgan expects software growth to accelerate in the second half of 2026, with broader AI adoption at IBM as a potential catalyst. The firm’s revised price target reflects improved earnings quality and cash-flow prospects driven by an expanding, higher-margin software mix combined with AI-related demand.
