Wall Street bullish on IBM ahead of earnings

IBM (IBM) is scheduled to report results of its fiscal fourth quarter after the market close on January 28, with a conference call scheduled for 5:00 pm ET. What to watch for:

GUIDANCE: Along with its last report, IBM guided for Q4 revenue growth in double digits and said it expects constant currency revenue growtth of “more than” 5% for fiscal 2025. For the quarter, Wall Street expects the company to report earnings per share of $4.29 on revenue of $19.21B.

CONFLUENT DEAL: In early December, IBM and Confluent (CFLT) announced they have entered into a definitive agreement under which IBM will acquire all of the issued and outstanding common shares of Confluent for $31 per share, representing an enterprise value of $11B. Under the terms of the agreement, IBM will acquire all of the issued and outstanding common shares of Confluent for $31 per share in cash, representing an enterprise value of $11B. Confluent will be acquired with available cash on hand. The board of directors of IBM and the board of directors and independent special committee of Confluent have each approved the transaction. The acquisition is subject to approval by Confluent shareholders, regulatory approvals and other customary closing conditions. Confluent’s largest shareholders and investors, who collectively hold approximately 62% of the voting power of Confluent’s outstanding common stock, entered into a voting agreement with IBM pursuant to which each has agreed to vote all of their common shares in favor of the transaction and against any alternative transactions. The transaction is expected to close by the middle of 2026.

Following the announcement, Stifel analyst David Grossman raised the firm’s price target on IBM to $325 from $295 and keeps a Buy rating on the shares. IBM historically gets optimal leverage from targets that have challenges penetrating large enterprises and significant potential cost synergies, said the analyst, who called the acquisition a “solid deal” for IBM.

JEFFERIES UPGRADE: Earlier this month, Jefferies upgraded IBM to Buy from Hold with a price target of $360, up from $300. The firm adjusted ratings in the software sector as part of its “playbook” for 2026. Investors should stay underweight software as growth slows and lags other sectors like semiconductors, the analyst tells investors in a research note. Jefferies believes 2026 will be another year of “gradual” artificial intelligence monetization, with more meaningful growth needed to ease disintermediation fears. The firm prefers infrastructure over applications in the first half of the year, but believes negative application sentiment “is not grounded in realities.” Applications sentiment should improve in the back half the year, Jefferies contends. To reflect this, the firm upgraded IBM and downgraded Adobe (ADBE) to start off the year.

RBC: The same week as the Jefferies upgrade, RBC Capital increased the firm’s price target on IBM to $350 from $300 with an Outperform rating. 2026 is likely to be a year when AI tailwinds become more evident for companies well positioned for enterprise AI adoption, while less prepared peers may remain pressured by the “AI is the death of software” narrative, the analyst told investors in a research note. Enterprise spending appears to be stabilizing and improving in select areas, with GenAI driving innovation even as management teams remain conservative in early 2026 guidance, the firm said.

EVERCORE: Last week, Evercore ISI raised the firm’s price target on IBM to $330 from $315 and maintained an Outperform rating on the shares, which were also added to the firm’s “Tactical Outperform list” ahead of the quarterly print. The firm expects the company to deliver in-line to slight upside compared to consensus revenue and EPS estimates, with performance driven by Infrastructure strength and improvement in Consulting, the analyst tells investors. For 2026, the firm expects IBM to initially guide to growth that is at the lower end of their mid-single-digit target range and about $15B in free cash flow, the analyst added.

JPMORGAN: Meanwhile, JPMorgan raised the firm’s price target on IBM to $312 from $290 and reiterated a Neutral rating on the shares. The firm expects IBM to report “solid” Q4 results led by acceleration in software, with strength in automation and Red Hat as transaction processing growth recovers. However, the shares are pricing in solid results at these levels, the analyst tells investors in a research note.