IBM Shares Climb Following Jefferies’ Bullish Upgrade

Shares of International Business Machines Corp. (IBM) advanced approximately 2.5% to $302 in today's trading session. The move was catalyzed by a significant rating upgrade from the investment bank Jefferies, which shifted its stance on the stock from "Hold" to "Buy." Analysts at the firm pointed to accelerating growth within IBM's software segment, fueled by its Red Hat unit, strategic acquisitions, and rising demand for artificial intelligence (AI) solutions.

Jefferies outlined a multi-year growth trajectory for IBM, identifying key drivers expected to materialize by 2026. The company's automation portfolio is projected to expand at a mid-to-high teen percentage rate. This outlook is underpinned by the completed integration of HashiCorp, which bolsters IBM's multi-cloud tools, and the planned $11 billion acquisition of Confluent. The Confluent deal is viewed as a strategic move to address gaps in real-time data integration capabilities.

Concurrently, IBM confirmed the multi-year extension of its longstanding partnership with the All England Lawn Tennis Club, home of the Wimbledon Championships. This collaboration, now in its 36th year, will focus on deploying hybrid-cloud and AI technologies to enhance the tournament's digital ecosystem. The alliance serves as a flagship enterprise AI reference for IBM, having already demonstrated impact with a 16% year-over-year increase in digital engagement during the 2025 championships.

AI and Software Momentum Builds

Beyond automation, Jefferies highlighted increasing momentum in IBM's AI business. The firm noted growing demand for generative AI consulting projects and the company's watsonx platform. Despite a valuation of roughly 26 times estimated 2027 earnings, the analysts see room for IBM's shares to catch up to software sector peers, which trade at an average multiple of 35.

Should investors sell immediately? Or is it worth buying IBM?

The market's positive response also reflects approval of IBM's ongoing transformation into a "software-first" enterprise. The acquisition of Confluent is considered a cornerstone of this strategy, aiming to combine real-time data streaming with IBM's existing hybrid-cloud and AI infrastructure. This positions the company as a comprehensive provider of foundational AI architectures.

Path Forward and Market Considerations

With the HashiCorp integration complete, analysts anticipate cross-selling benefits to emerge throughout the current year. Investor attention now turns to forthcoming quarterly results for concrete evidence of the projected software growth. While breaching the $300 price level is considered a technically significant milestone, further share price appreciation is seen as dependent on broader technology sector sentiment and successful execution of the acquisition strategy.

The closing of the Confluent transaction and management's guidance for the first fiscal quarter are identified as crucial near-term catalysts.