UBS Downgrades IBM Stock Despite Positive Outlook

UBS analyst David Vogt maintains a Sell rating on IBM despite raising the price target to $195. He expects mixed demand, particularly in IBM's Software and Consulting divisions, to offset positives from a weaker US dollar and the launch of IBM's next mainframe cycle. In contrast, Bank of America and Evercore ISI raised their price targets and maintained Buy ratings, seeing IBM's shift to faster-growing software businesses and cost-cutting measures as a solid foundation for stronger long-term performance.

International Business Machines Corp.'s (IBM) stock has shown robust performance so far this year, outperforming many of its Big Tech peers. As of Monday's close, IBM's stock has climbed 33%, compared to Meta Platforms Inc.'s (META) 23%, Microsoft Corp.'s (MSFT) 18%, Nvidia Corp.'s (NVDA) 17%, and Amazon.com Inc.'s (AMZN) 1% gains [1]. This performance has been attributed to IBM's unique business model, which is less susceptible to the threats posed by artificial intelligence (AI) and geopolitical tensions.

Analysts at Melius Research, led by Ben Reitzes, highlight IBM's stability in the software landscape, particularly its infrastructure software business. They predict that IBM's stock could see further gains, driven by multiple expansion as long as the company continues to deliver strong results [1]. The analysts note that IBM's software is harder to replace and is often priced by usage or instances, unlike software-as-a-service (SaaS) companies that depend on paid seats, which are threatened by AI.

While IBM's Software and Consulting divisions are expected to face mixed demand, according to UBS analyst David Vogt, who maintains a Sell rating but raised the price target to $195, the company's shift to faster-growing software businesses and cost-cutting measures are seen as positive long-term indicators [2]. In contrast, Bank of America and Evercore ISI have raised their price targets and maintained Buy ratings, recognizing IBM's strategic shift as a solid foundation for stronger performance [2].

The recent acquisition of CNX Corporation by Izzi Software, which specializes in accelerating app development for IBM Power Systems, further underscores IBM's commitment to its high-performance server computers [2]. This acquisition marks Izzi Software's entry into the IBM Power ecosystem and is part of the company's strategy to maximize the value of its investment in the Valence framework.

In summary, IBM's stock performance has been driven by its unique business model and strategic initiatives. Analysts' views on IBM's prospects vary, but many see the company's shift to faster-growing software businesses and cost-cutting measures as a solid foundation for long-term performance.

References:
[1] https://www.morningstar.com/news/marketwatch/20250707405/ibms-stock-is-beating-big-tech-this-year-why-this-analyst-sees-more-gains-ahead
[2] https://finance.yahoo.com/news/izzi-software-expands-ibm-power-111953546.html