JP Morgan Maintains Neutral on IBM, Raises PT to $290 from $244.

JP Morgan Maintains Neutral on IBM, Raises PT to $290 from $244.

In a recent research note, JP Morgan has maintained its neutral rating on International Business Machines Corp. (IBM) while raising its price target from $244 to $290. This decision comes amidst a broader trend of significant infrastructure spending in the United States, particularly in the energy and utility sectors, which is expected to drive substantial growth for the company [3].

IBM, one of America’s greatest tech companies, has seen a significant decline over the past several decades. During the most recent quarter, revenue increased 8% to $17 billion, compared to the same quarter of the previous year. Per-share earnings rose 18% to $2.31. While these figures represent growth, they are still considered modest compared to the performance of other major tech companies [2].

The company's market cap stands at $262 billion, significantly lower than the market caps of Apple, Amazon.com Inc. (NASDAQ: AMZN), and Nvidia. Alphabet Inc. (NASDAQ: GOOGL) is close to that multiple. Microsoft Corp. (NASDAQ: MSFT), for instance, had a revenue of $70.1 billion in the most recent quarter, up 13% from the same quarter the year before, and earnings rose 18% to $3.46 per share. Microsoft’s net income for the period was $25.8 billion [2].

IBM has missed out on several major technological advances, including search, cloud computing, computer operating systems, e-commerce, and artificial intelligence (AI) chips. Companies that now lead in these areas started small when IBM was much larger. For example, Amazon’s AWS has a 30% global market share in cloud computing, while Microsoft’s share is 21% and Google’s is 12%. IBM's share is 2% [2].

The AI data center boom is a significant driver of infrastructure spending, with Big Tech capex set to hit $250 billion in 2025 alone. Microsoft is expected to spend $80 billion on AI data centers this year. Generative AI platforms use 10X more energy compared to a Google search, with some data centers consuming the same amount of electricity as a midsize city [3].

The U.S. federal government and technology giants like Microsoft and Meta are attempting to jumpstart the energy and infrastructure spending spree to support rapid AI growth, reshoring, and construction of cutting-edge semiconductor plants [3]. This backdrop is why JP Morgan has maintained its neutral rating on IBM, acknowledging the potential growth opportunities in the infrastructure sector while also considering the company's historical performance and current market position.

References:
[1] https://www.marketscreener.com/news/t-mobile-us-jp-morgan-reiterates-its-buy-rating-ce7c5cd3dd81f721
[2] https://247wallst.com/technology-3/2025/07/24/ibm-is-americas-worst-tech-company-2/
[3] https://www.ainvest.com/news/primoris-services-pt-raised-102-jp-morgan-maintains-overweight-rating-2507/