TLDR
- Barclays initiated IBM coverage with an Overweight rating and a $350 price target on Monday.
- IBM stock surged roughly 11-12% to around $330 in premarket trading.
- The bull case centers on IBM’s software business, which generates nearly half of total revenue and the bulk of profits.
- Barclays analyst Raimo Lenschow argues IBM’s infrastructure software serves large, regulated enterprises — creating a “sticky” customer base unlikely to be disrupted by AI.
- The move builds on broader momentum: IBM is up 28% over the past month and just posted its strongest weekly gain in 25 years.
IBM stock was moving sharply higher on Monday after Barclays kicked off coverage with a bullish call — and it had nothing to do with quantum computing.
International Business Machines Corporation, IBM
IBM surged roughly 11% in premarket trading to $330.11 after Barclays analyst Raimo Lenschow initiated the stock at Overweight with a $350 price target. That implies another 17.5% upside from there.
The stock has been on a tear. IBM is up 28% over the past month and just notched its strongest weekly gains in 25 years. It’s been a good few weeks to be a Big Blue shareholder.
Quantum has grabbed the headlines lately — IBM picked up $1 billion in federal funding from the CHIPS and Science Act to build a standalone quantum chip foundry, and then pledged more than $10 billion of its own money toward quantum research and manufacturing over the next five years. But that’s not what Lenschow is buying.
The Software Story
His thesis is simpler: IBM is a software company now, and the market hasn’t fully priced that in.
Nearly half of IBM’s revenue comes from software, and it generates most of the company’s profits. Lenschow sees that mix increasing over time given software’s stronger growth profile.
The key part of his argument is what kind of software IBM sells. It’s not consumer apps or trendy AI tools. It’s foundational infrastructure — Red Hat Enterprise Linux, Red Hat OpenShift, automation tools, and data and analytics platforms — built specifically for large, complex enterprises running hybrid cloud and on-premise environments.
Those are customers that will never move fully to the cloud, Lenschow notes. That creates a locked-in, recurring revenue base that’s tough to displace.
“We see mid single digit organic revenue growth and ongoing margin leverage, which should create a stable earnings compounder with a Quantum option,” he wrote.
Not a New Idea
Lenschow isn’t the first to make this call. Oppenheimer’s Param Singh used nearly the same language back in January, calling IBM’s software portfolio “sticky.” Evercore ISI’s Amit Daryanani echoed it in February. And in April, Citi Research’s Fatima Boolani described IBM’s software and hardware as entrenched “across the most critical points of the world’s largest, most complex IT infrastructures.”
The pile-on of analyst support reflects a clear thesis gaining traction: IBM’s enterprise software base is not a liability — it’s a moat.
There’s also a social media angle adding fuel to the fire. Comments made by Donald Trump in December praising IBM’s CEO have resurfaced online, circulating alongside discussion of other instances where the president has publicly highlighted specific stocks in 2025.
The broader Street view is more cautious. Of the analysts currently covering IBM, 10 have it at Buy and 11 at Hold — a Moderate Buy consensus. The average price target sits at $291.69, suggesting the stock may be fully valued at current levels after the recent run.
IBM’s most recent results showed a software segment continuing to outperform, with the company leaning into hybrid cloud and AI integration across its enterprise client base.
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