IBM Earns Buy Rating as Analysts See Software Acceleration Ahead in 2026

Core Viewpoint - IBM is recognized as a significant player in the AI sector, with recent upgrades indicating a positive outlook for its stock driven by software growth and strategic acquisitions [1][2]. Group 1: Stock Upgrade and Growth Potential - Jefferies upgraded IBM's stock from "Hold" to "Buy," citing a clearer path to software acceleration leading into 2026, primarily due to Red Hat momentum and synergies from recent acquisitions [1][2]. - The strategic acquisitions, including HCP and the pending CFLT deal, are expected to enhance IBM's hybrid cloud and data platform capabilities, creating more cross-sell opportunities and expanding open-source monetization pathways [2]. Group 2: Business Performance and Valuation - IBM's Mainframe business is performing well, contributing to stability and recurring revenue, which supports confidence in the company's near-term execution [3]. - The current trading valuation of IBM is at 26 times the projected earnings for 2027, which presents an upside potential compared to the average of 35 times for large-cap software peers, indicating room for growth in software reacceleration execution [3].