TLDR
- IBM stock has dropped 19% since July 14 after weak Q2 earnings missed revenue estimates.
- Susquehanna analyst James Friedman raised his price target to $235 from $225 but kept a Neutral rating.
- IBM’s quantum division is gaining attention but currently generates very little revenue.
- A senior IBM executive sold $5.75 million worth of stock on August 26.
- The annual Quantum World Congress in September is seen as a key upcoming catalyst for the stock.
IBM stock opened at $235.78 on Monday, sitting near its 52-week low of $199.19 and well below its 52-week high of $332.46. The stock has fallen 19% since July 14, while the S&P 500 gained 2.1% over the same period.
International Business Machines Corporation, IBM
That slide started with a record single-day plunge when IBM pre-announced its Q2 earnings. The company reported $2.93 earnings per share, matching estimates, but revenue of $17.16 billion fell short of the $17.46 billion consensus. Revenue was up just 1.1% year over year.
One factor weighing on the business is customers shifting budgets toward AI hardware, pulling spending away from IBM’s traditional offerings.
Quantum Gets the Spotlight
With core business lines facing pressure, IBM’s quantum computing division has become a talking point. Susquehanna analyst James Friedman highlighted IBM’s acquisition of HRL Laboratories and a partnership with the Commerce Department to build Anderon, a standalone quantum chip foundry.
IBM has been researching quantum computing since before 2000 and has contributed to major scientific breakthroughs. But the division still generates minimal revenue, and broader commercialization depends on major technological advances expected before 2030.
Friedman raised his price target on IBM to $235 from $225 but kept his Neutral rating. He pointed to the annual Quantum World Congress in late September as a near-term catalyst for renewed interest in the technology.
He also flagged other moving parts: a renewed software focus in IBM’s consulting arm following a new leadership appointment, limited Red Hat growth due to passing server supply constraints, and a mainframe revenue delay story, where 40% of deals that slipped in Q2 closed early in Q3.
Insider Sale and Institutional Moves
On August 26, SVP Robert David Thomas sold 25,000 IBM shares at an average price of $230.32, totaling $5.76 million. The sale cut his ownership in the company by 34.34%, leaving him with 47,800 shares.
On the institutional side, several firms added to their positions during Q2. New Republic Capital raised its stake by 144%, while Daiwa Securities Group increased its holdings to 251,572 shares worth $70.7 million.
Institutional investors and hedge funds now own 58.96% of IBM stock.
IBM’s average analyst rating sits at “Moderate Buy” with an average price target of $265.40. Sixteen analysts have a Buy rating, eleven Hold, and one Sell. Barclays has an Overweight rating with a $262 target, and JPMorgan holds an Overweight with a $250 target.
IBM’s next quarterly dividend of $1.69 per share is scheduled for payment on September 10.
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