Investors in International Business Machines Corporation (IBM) have witnessed the stock price hitting all-time highs this year as the world continues to fall in love with AI.
Shares in the US-based technology giant gained 21% from $161.50 at the start of January to $195.81 by early March 2024.
But does the fact that it’s since given up around 13% of those gains make it a more appealing prospect for would-be shareholders looking for an attractive entry point?
In our IBM stock forecast for 2024, 2025, and beyond, we analyze the company’s recent performance, evaluate its financial results, and reveal the opinions of stock market analysts.
Key Takeaways
Summary of the Latest IBM Stock Predictions
| IBM Stock Forecast
(as of May 28, 2024) |
1-Year Forecast | 2025/2026 | 5-Year Forecast
(May 2029) |
| MarketBeat | $181.29 | – | – |
| WalletInvestor | $180.42 | $182.15 | $219.15 |
| TipRanks | $183.21 | – | – |
| CoinCodex | $171.40 | $171.91 | $173.45 |
IBM Stock Analysis
Let’s start our IBM share price forecast by examining the company’s performance over the past year.
As the stock market closed on May 24, 2024, IBM’s stock price stood at $170.89, 35% higher than the $126.76 level it was at 12 months ago.
However, the past year also saw IBM achieve its all-time high closing price of $195.81 on March 12, 2024.
The increases leading to the March high are believed to have been triggered by reports that IBM was cutting jobs in marketing and communications.
CNBC reported in March that IBM had told employees in a seven-minute meeting that the positions were being axed.
It followed a previous interview with Arvind Krishna, IBM’s chairman and chief executive, who had revealed how the company was massively upskilling all of its employees on AI.
The Latest IBM News & Key Drivers to Consider
So, what is the latest IBM news that needs to be considered as part of any IBM stock forecast?
Acquisition of HashiCorp
In late April 2024, the company announced its intention to acquire US-based HashiCorp for $35 per share, which represented an enterprise value of $6.4 billion.
In a statement accompanying its first quarter results, IBM said the deal would create a “comprehensive end-to-end hybrid cloud platform” for the AI era.
“The transaction is expected to close by the end of 2024, subject to approval by HashiCorp shareholders, regulatory approvals, and other customary closing conditions,” it stated.
HashiCorp, which is headquartered in San Francisco, California, helps organizations automate multi-cloud and hybrid environments.
In a statement, Dave McJannet, HashiCorp’s chief executive, said IBM’s “leadership in hybrid cloud” and its rich history of innovation made it the ideal home for HashiCorp.
“I am excited to be able to help our customers further, and I look forward to the future of HashiCorp as part of IBM,” he wrote.
Solid Financial Results
In late April 2024, IBM announced first-quarter revenue of $14.5 billion, which was up 3% on a constant currency basis.
The figures were broken down as follows:
In a statement, IBM’s Arvind Krishna pointed out the company had begun the year with solid revenue and free cash flow growth, reflecting the strength of its hybrid cloud and AI strategy.
“We continue to capitalize on the excitement and demand for enterprise AI from our clients,” he wrote. “Our book of business for watsonx and generative AI again showed strong momentum, growing quarter over quarter, and has now eclipsed one billion dollars since we launched watsonx in mid-2023.”
James Kavanaugh, IBM’s senior vice president and chief financial officer, pointed out that IBM had focused on the fundamentals of our business, which included growing revenue, expanding operating margins, improving profit performance, and increasing productivity.
“These fundamentals, combined with our strong cash generation, position us to invest both organically and through strategic acquisitions like today’s announcement with HashiCorp,” he wrote. At the same time, we continue to return value to shareholders through our dividend.”
The first quarter results followed a 2023 performance in which IBM generated $61.9 billion in revenue, up 3% on a constant currency basis, according to its annual report.
Future Expectations
Looking ahead, IBM continues to expect constant currency revenue growth that’s consistent with its mid-single-digit model.
“At current foreign exchange rates, currency is expected to be about a one-and-a-half to two-point headwind to revenue growth,” it stated.
It also expects about $12 billion in free cash flow.
IBM Stock Forecast: Analyst Views
Next, we take a look at the IBM price target set by analysts following the company.
According to Susannah Streeter, head of money and markets at Hargreaves Lansdown, tech company valuations are driven by investors’ views of how AI will be a game changer.
She told Techopedia that IBM was no different.
“The opportunities are vast,” she said. “IBM has been investing heavily in its AI products from a huge cloud-based supercomputer to its range of Granite AI models, which allow customization by companies.”
She pointed out that it was also focused on operationalizing AI for its clients across a huge range of functions, from customer services and experience to human resources.
“However, it hasn’t been immune to the more difficult economic climate,” she added. “In an era of high interest rates (it) has seen more caution creep in, particularly for its consulting services, where revenue came in weaker than forecast in the last count.”
While equipping consulting teams with AI co-pilots was intended to recoup revenue, concerns over AI consulting opportunities could mean gains are more limited than expected.
IBM is also taking a “longer-term holistic view” of its AI future, according to Streeter, with HashiCorp hopefully capitalizing on the demand for storing data required to power models.
“The diversification of its revenue streams, which includes its consulting business, should provide stability, but there will still be disappointment ahead if growth doesn’t accelerate, particularly given how much of a boost AI speculation has given the share price,” she added.
Malik Ahmed Khan, an equity analyst for Morningstar, estimates the stock’s fair value at $139 and believes it is overvalued.
While not affecting Morningstar’s IBM valuation, he also pointed out that HashiCorp had some synergies with the company’s existing products, especially Red Hat. He said:
“At the same time, we reiterate our long-term thesis that while IBM will continue to have standout parts of its broader product portfolio, including high-growth solutions, the new age of IT interoperability will drive an unraveling of the average customer’s spending with IBM.”
IBM Stock Predictions 2024, 2025 & 2030: Where Will the Price Go Next?
So, is IBM a buy, hold, or sell? Well, IBM is currently rated as a ‘hold,’ based on the views of 14 Wall Street analysts compiled by MarketBeat as of May 28, 2024.
However, this view is not unanimous. While six have it as a ‘hold’, three have ‘buy’ recommendations in place and three view it as a ‘sell’.
Their consensus IBM stock forecast is $181.29, which represents a 6.08% potential upside over the $170.89 closing price on May 24, 2024.
The highest forecast has the stock rising to $220, while the lowest predicted it could fall down to $130.
The following table shows the latest analysts’ IBM stock predictions.
| Date | Analyst Firm | Action | Rating Change | Price Target | Percentage Change |
| 5/22/2024 | Royal Bank of Canada | Reiterated Rating | Outperform ➝ Outperform | $200.00 | +15.47% |
| 5/16/2024 | Stifel Nicolaus | Reiterated Rating | Buy ➝ Buy | $190.00➝
$190.00 |
+12.43% |
| 5/2/2024 | BNP Paribas | Initiated Coverage | Underperform | $145.00 | -11.78% |
| 4/26/2024 | Morgan Stanley | Lower Target | Equal Weight ➝ Equal Weight | $186.00 ➝ $179.00 | +6.90% |
| 4/25/2024 | JPMorgan Chase & Co | Lower Target | Neutral ➝ Neutral | $190.00 ➝ $185.00 | +9.83% |
| 4/25/2024 | BMO Capital Markets | Lower Target | Market Perform ➝ Market Perform | $210.00 ➝ $190.00 | +13.27% |
| 4/25/2024 | Wedbush | Boost Target | Neutral ➝ Neutral | $140.00 ➝ $160.00 | -13.05% |
| 4/23/2024 | Jefferies Financial Group | Lower Target | Hold ➝ Hold | $215.00 ➝ $210.00 | +14.09% |
| 4/22/2024 | UBS Group | Boost Target | Sell ➝ Sell | $125.00 ➝ $130.00 | -28.84% |
Source: MarketBeat
The IBM stock forecast 2025 from Tipranks also has the stock as a ‘hold,’ according to the views of 14 analysts.
Their consensus view is the stock could enjoy a 7.21% upside to $183.21 over the next 12 months. The highest forecast came in at $215, and the lowest at $130.
According to the algorithmic forecasts of Wallet Investor, the IBM stock price could hit $180.42 over the coming year. The site’s five-year IBM stock forecast has the price rising to $219,15.
Meanwhile, the IBM stock forecast 2030 from Coincodex has the IBM stock price at $173.96 by the beginning of that year.
However, it’s worth noting that analysts’ and algorithm-based projections might prove to be wrong.
The Bottom Line: Should I Invest in IBM?
The latest IBM stock forecasts are useful for providing a broader picture of the company’s recent stock performance and outlook.
However, whether you should invest in IBM stock will depend on your view of the company’s prospects and your attitude to risk.
It’s fair to say the view of Wall Street analysts polled by MarketBeat, as of May 28, 2024, is split. Six see it as a ‘hold,’ three as a ‘buy,’ and three as a ‘sell.’
However, analysts can be wrong. You’ll need to conduct your own research to decide whether IBM is an attractive holding.
Do your own research and always remember your investment decision depends on your attitude to risk, your expertise in the stock market, the spread of your portfolio, and how comfortable you feel about losing money. The information in this article does not constitute investment advice and is meant for informational purposes only.
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References
- IBM is slashing jobs in marketing and communications (Cnbc)
- IBM is cutting jobs in marketing and communications (Cnbc)
- IBM releases first-quarter results (Ibm)
- IBM to Acquire HashiCorp, Inc. Creating a Comprehensive End-to-End Hybrid Cloud Platform (Newsroom.ibm)
- IBM 2023 Annual Report (Ibm)
- International Business Machines (IBM) Stock Forecast & Price Target (Marketbeat)
- International Business Machines (IBM) Stock Forecast & Price Target (Tipranks)
- International Business Machines Stock Forecast, “IBM” Share Price Prediction Charts (Walletinvestor)
- International Business Machines (IBM) Stock Forecast & Price Prediction 2025, 2030 (Coincodex)
