IBM Leaves Big Tech in the Dust as Stock Surges 27%—Analysts See More Upside Coming
AI, Cloud, and Quantum Bets Fuel IBM’s Comeback on Wall Street
Once dismissed as a legacy mainframe company, International Business Machines Corp. (ticker IBM, listed on the NYSE) is staging a remarkable comeback. In 2025, IBM shares have surged approximately 27% year-to-date, outpacing some of the biggest names in tech. As the “Magnificent Seven” struggle to maintain momentum, IBM’s quieter transformation is stealing the spotlight—and analysts believe the rally is far from over.
Under the leadership of CEO Arvind Krishna, IBM has undergone a strategic overhaul. By pivoting toward hybrid cloud services, enterprise-grade AI, and quantum computing, the company is reinventing its value proposition. This transformation, rooted in its $34 billion acquisition of Red Hat in 2019, is now delivering results. IBM hit a fresh record high earlier this year as revenues climbed and market excitement grew around its AI and quantum initiatives.
Wall Street has taken notice. The stock has posted a 10-day winning streak, gaining over 25% in that span alone and becoming the top-performing component of the Dow Jones Industrial Average in 2025. IBM’s latest earnings report beat expectations with adjusted EPS of $3.92 and revenue of $17.55 billion. The company also raised its full-year free cash flow forecast to $13.5 billion, a bullish sign for long-term investors.
Artificial intelligence has been one of the company’s most important growth engines. IBM’s generative AI business is now a $6 billion unit, with over $5 billion in bookings in the first quarter alone. Its enterprise-focused Granite model, built into the Watsonx platform, has earned praise for delivering targeted, efficient results—offering businesses a viable alternative to the large, resource-heavy AI models of its competitors.
IBM is also a frontrunner in the quantum computing race. Its roadmap includes the rollout of a fault-tolerant, large-scale quantum computer by the end of the decade. Key projects like Quantum Starling and Bluejay have captured investor imagination, and analysts are responding. Wedbush raised its price target to $325, suggesting an additional 12% upside, while Oppenheimer initiated coverage with an Outperform rating and a target of $320—roughly 28% above current levels.
The Red Hat integration continues to pay off. Software now makes up 45% of IBM’s revenue mix, with Red Hat growing 17% year-over-year. Analysts project the OpenShift platform could contribute nearly $3 billion this year, driving margin expansion and customer stickiness.
Unlike many tech stocks that trade at premium valuations, IBM still appears attractively priced. Its price-to-earnings ratio sits around 50, supported by strong profit and cash flow performance. While some technical indicators suggest short-term overbought conditions, many analysts believe IBM still has more room to run.
Several macro factors are aligning in IBM’s favor. Ongoing demand for hybrid cloud solutions, rising AI adoption among enterprise clients, and a U.S. government investment package totaling $150 billion—with $30 billion earmarked for quantum computing and mainframe systems—are all tailwinds for the company.
Investment firms including Citi, Oppenheimer, Bernstein, and Wedbush have all recently expressed bullish views, arguing that IBM has successfully shifted from an aging hardware giant to a lean, AI-first software and services powerhouse. With growing institutional confidence and favorable sector dynamics, the next 12 months could see IBM deliver double-digit gains once again.