Wedbush analysts on Monday added IBM to their "best ideas" list, citing the tech giant's ability to benefit from increased enterprise AI spending. IBM stock was higher in premarket trading Monday.
"With AI expected to drive $4.4 trillion in annual productivity gains by 2030, we believe that IBM is well-positioned to capitalize on the current demand shift for hybrid and AI applications as more enterprises look to implement AI to drive efficiencies across operations," the Wedbush note said.
IBM is balancing investing for further growth, with "operating leverage into its business model to drive its free cash flow profile, which is expected to be roughly 2-3 points above revenue growth," the Wedbush analysts said.
On the stock market today, IBM stock rose more than 1% to 246.87 in premarket trading.
IBM Stock: Up 11% In 2025
IBM stock has gained 11% year-to-date, outperforming a 4.8% loss from the S&P 500. That's after IBM stock rallied more than 35% last year, helped by Wall Street's increasing confidence the tech giant can benefit from AI demand. Shares returned to record highs for the first time in a decade.
But the company's shares took a hit late last week after technology consulting rival Accenture warned U.S. government business could see slower growth, citing broad federal spending cuts promised by the Trump administration and Elon Musk's DOGE initiative. The warnings "bodes negatively" for IBM's consulting segment, an Evercore ISI analyst said last week.
IBM stock fell below its 50-day moving average with a 3.5% slide on Thursday. Early action Monday points to IBM retaking the closely-watched trendline, however.
