Should You Bet on IBM Stock Amid Rising Estimate Revisions?

International Business Machines Corporation IBM is currently witnessing an uptrend in estimate revisions. Earnings estimates for IBM for 2026 have moved up 6.6% to $12.44 over the past year, while the same for 2027 has increased 5.4% to $13.36. The positive estimate revision portrays bullish sentiments about the stock’s growth potential.

Image Source: Zacks Investment Research

What Propels IBM?

IBM is benefiting from healthy demand trends for hybrid cloud and AI, which drive the Software and Consulting segments. The company’s growth is expected to be aided by analytics, cloud computing and security in the long run. A combination of a better business mix, improving operating leverage through productivity gains and increased investment in growth opportunities will likely boost profitability.

With a surge in traditional cloud-native workloads and associated applications, along with a rise in generative AI deployment, there is a radical expansion in the number of cloud workloads that enterprises are currently managing. This has resulted in heterogeneous, dynamic and complex infrastructure strategies, which have led firms to undertake a cloud-agnostic and interoperable approach to highly secure multi-cloud management, translating into a healthy demand for IBM hybrid cloud solutions. In addition, the buyout of HashiCorp has significantly augmented IBM’s capabilities to assist enterprises in managing complex cloud environments. HashiCorp’s tool sets complement IBM RedHat’s portfolio, bringing additional functionalities for cloud infrastructure management and bolstering its hybrid multi-cloud approach.

IBM’s watsonx platform is likely to be the core technology platform for its AI capabilities. watsonx delivers the value of foundational models to the enterprise, enabling them to be more productive. This enterprise-ready AI and data platform comprises three products to help organizations accelerate and scale AI: the watsonx.ai studio for new foundation models, generative AI and machine learning, the watsonx.data fit-for-purpose data store built on an open lake house architecture and the watsonx.governance toolkit to help enable AI workflows to be built with responsibility and transparency.

Image Source: Zacks Investment Research

IBM Rides on Quantum Computing

IBM continues to push the boundaries of quantum technology to explore solutions to complex problems beyond the reach of classical computing. The company has inked a partnership with Advanced Micro Devices, Inc. AMD to develop scalable, open-source platforms that could redefine the future of computing. The next-generation computing architectures, known as quantum-centric supercomputing, will introduce a new dimension to the realm of quantum computing by enabling users to increase the complexity of algorithms in the quantum hardware. As users seek to achieve quantum advantage — where quantum computers outperform the classical ones — the new quantum-centric supercomputing could pave the way for technological innovations across the quantum ecosystem.

It has also collaborated with Cisco Systems, Inc. CSCO to develop a connected network of fault-tolerant quantum computers by 2030. The companies aim to pool their individual resources and key expertise to create a pathway toward an exponentially large computational space, leading to the formation of a quantum computing Internet. This is likely to create a platform where many distributed quantum-based technologies, such as quantum computers, quantum sensors and quantum communications, are connected to share information across distances.

As part of this collaborative effort, IBM intends to develop a quantum networking unit (QNU) to serve as the interface linking several quantum computers to a quantum processing unit (QPU). This will facilitate the conversion of stationary quantum information in the QPU into "flying" quantum information for transfer across potentially multiple quantum computers through a network. Cisco is developing a high-speed software protocol framework that can continuously and dynamically reconfigure network paths to drive the quantum information transfer required for a given quantum algorithm or application.

Price Performance

IBM has jumped 9.9% over the past year compared with the industry’s growth of 135.8%, outperforming peers like Microsoft Corporation MSFT but lagging Amazon.com, Inc. AMZN. While Amazon has inched up 19.7%, Microsoft gained 4.4% over this period.

One-Year IBM Stock Price Performance

Image Source: Zacks Investment Research

End Note

With solid fundamentals and healthy revenue-generating potential, driven by robust demand trends, IBM appears to be a solid investment proposition. Further, a strong emphasis on hybrid cloud, diligent execution of operational plans and AI focus are driving more value for customers. Moreover, with improving earnings estimates, the stock is witnessing a positive investor perception at the moment.

International Business Machines delivered a trailing four-quarter average earnings surprise of 7.9% on average. IBM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock.

Radical New Technology Could Hand Investors Huge Gains

Quantum Computing is the next technological revolution, and it could be even more advanced than AI.

While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.

Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.

Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.

See Top Quantum Stocks Now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report

Microsoft Corporation (MSFT): Free Stock Analysis Report

International Business Machines Corporation (IBM): Free Stock Analysis Report

Cisco Systems, Inc. (CSCO): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research