IBM stock is trading around $294.79, sitting just shy of its 12-month high of $332.46, after a 25% rally in Q2 brought it close to record territory.
International Business Machines Corporation, IBM
Susquehanna analyst James Friedman kicked off coverage on International Business Machines Friday with a Neutral rating and a $303 price target. That implies about 2.5% upside from current levels — not exactly a ringing endorsement, but not a sell either.
Friedman’s note can be summed up simply: there’s a lot to like about IBM, just not enough to buy it right now.
The analyst is genuinely enthusiastic about IBM’s quantum-computing unit. He values it at $65 per share — a rare move for an analyst to put a specific dollar figure on a division. He sees IBM capturing a large slice of a $650 billion quantum market by 2040, calling it “a great way to participate.”
IBM has a 12-month low of $212.34 and currently carries a market cap of $277 billion. The stock has lagged the S&P 500 in 2026, down less than 1% while the index is up more than 10%.
Where Friedman pumps the brakes is IBM’s consulting arm. The bulk of IBM’s AI revenue sits in low-margin consulting — what he describes as “a fragile end market where revenue dilutes consolidated margins.”
He also flagged pressure from hyperscalers bundling frontier AI into cloud contracts, which could push IBM’s watsonx AI products toward niche use cases and limit growth.
Then there’s the COBOL issue. Anthropic released a tool earlier this year designed to modernize legacy COBOL codebases. Friedman sees this as a direct threat to one of IBM’s most lucrative revenue streams — mainframe migration and consulting work tied to legacy systems.
“We see downside catalysts the consulting industry finds hard to shake,” he wrote.
IBM’s most recent quarterly results were solid. The company posted EPS of $1.91, beating the $1.81 consensus estimate, on revenue of $15.92 billion — ahead of the $15.60 billion forecast. Revenue grew 9.5% year over year.
On the product side, IBM and Red Hat commercially launched Project Lightwell, a cybersecurity initiative that’s now a live product with enterprise customers. IBM also upgraded its Bob AI development platform with multi-agent capabilities.
Not all the news has been positive. Reports that Starbucks is building internal AI tools to replace software from IBM and Microsoft have rattled sentiment, raising concerns that large enterprise customers could reduce their vendor dependency.
IBM’s Q2 2026 earnings are scheduled for July 22. Analysts expect full-year EPS of $12.45.
Sixteen analysts currently have a Buy rating on IBM, nine have a Hold. The average price target across Wall Street sits at $306.28.
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