JPMorgan upgraded IBM to Overweight from Neutral on Tuesday. The firm raised its price target for the stock to $291 from $270.
IBM shares rose in premarket trading despite a broad technology sector selloff. Analyst Brian Essex projects the company's software business will accelerate by the second half of 2026.
Growth drivers include Red Hat, OpenShift migrations, and AI-driven container adoption. The software segment currently accounts for 45% of IBM's total revenue. This division generates two-thirds of the company's overall profit. JPMorgan suggests IBM's valuation may expand further as a key beneficiary of AI infrastructure.