The shift toward corporate artificial intelligence is creating a mixed bag for the world’s oldest tech giant as top analysts refine their bets. On Monday, April 20, 2026, Jefferies (JEF) analyst Brent Thill updated his outlook on IBM (IBM), maintaining a “Buy” rating while lowering his price target from $370 to $320. The move comes as the company prepares to report its latest earnings, with the market weighing its massive software growth against the high costs of building out new AI tools.
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New trading tool for IBM bullsJefferies Refines the Path to $320 for IBM Stock
The company is trading its old reliance on hardware for a future built on fast software and cloud services.
In his report released this morning, Brent Thill noted that while he is trimming the price target, the core reason to own the stock remains intact. He stated that the company’s “software re-acceleration depends not on mainframe operations but on broader momentum across hybrid cloud, AI, automation and data.”
Even with the target cut, the new $320 level still suggests significant upside from the current price of roughly $254. Jefferies believes that as more businesses look to modernize their old code using the watsonx platform, the company’s software division will continue to grow faster than the rest of its business.
AI Modernization Tools Create Both Risk and Reward
The rise of digital assistants is forcing the company to prove that its new technology won’t eat into its existing profits.
One of the biggest talking points in today’s Jefferies report is how IBM is using AI to help banks and governments update their ancient computer systems. Specifically, the report mentioned concerns that new AI tools, like those from competitor Anthropic, could disrupt IBM’s traditional business of managing old “COBOL” code.
However, Thill argued that IBM is staying ahead by integrating these same tools into its own watsonx Code Assistant. He noted that this strategic move allows the company to lead the modernization wave rather than being swept away by it, even if it requires a temporary speed bump in certain profit margins.
Institutional Investors Pile Into IBM Ahead of Q1 Earnings
The smart money is moving back into IBM stock as the company’s push into quantum computing and enterprise AI begins to show real financial results.
While analysts are fine-tuning their targets, big investment funds are showing their confidence through major purchases. Data from MarketBeat today shows that several large trusts have recently opened new positions in the company, which now has over 58.96% institutional ownership. This interest is being driven by the company’s strong financial health, including its recent Q1 beat where it reported $19.69 billion in revenue, up 12.2% from the year before.
With a healthy 2.21% dividend yield, many investors view the stock as a safe and profitable way to bet on the future of the AI revolution without the extreme volatility of smaller tech names.
Is IBM a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on IBM stock based on 11 Buy and six Hold ratings assigned in the past three months. Furthermore, the average 12-month IBM price target of $307.75 per share implies 21.4% upside potential.
