International Business Machines Corp. (NYSE: IBM) is gaining renewed investor attention after delivering robust Q1 earnings and receiving bullish updates from major analysts. As the tech giant leans deeper into AI and software innovation, experts believe IBM stock could have more room to run—despite ongoing headwinds in consulting and infrastructure.
In the first quarter of 2025, IBM reported $14.5 billion in revenue, marking a 2% increase at constant currency, with free cash flow hitting $2 billion, the company’s highest Q1 cash flow in years. Its software segment was the clear standout, surging 9% year-over-year, driven by Red Hat (+13%), Automation (+15%), and growing demand for hybrid cloud and AI integration. IBM also confirmed that its generative AI business has crossed $6 billion in total booked business.
In response to these strong fundamentals, Bank of America raised its price target on IBM stock from $270 to $290, maintaining a Buy rating. Analysts are citing the upcoming launch of the z17 mainframe, which promises enhanced AI capabilities and security features, as a key growth lever. IBM’s strategic acquisitions, including HashiCorp, are also expected to strengthen its hybrid cloud ecosystem.
IBM stock opened at $268.95 on Monday, approaching its 52-week high of $270.17. The stock has gained significant momentum in 2025, fueled by optimism in AI and recurring software revenues. Its annual recurring revenue (ARR) for software is now $21.7 billion, up 11% from last year.
However, challenges remain. Infrastructure revenue declined 4%, and consulting revenues were flat, as client spending in some discretionary projects slowed due to macroeconomic uncertainty. IBM’s federal consulting business, though a small portion of overall consulting, may face cuts depending on government budgets.
Still, Wall Street sentiment is largely positive. Out of 23 brokerages, the consensus rating remains “Outperform”, with multiple firms raising their targets. Wedbush reaffirmed its $300 price target, citing IBM’s expanding margins and improved product mix.
Looking ahead, IBM expects full-year revenue growth of 5% or more, along with free cash flow guidance of approximately $13.5 billion. The tech veteran appears well-positioned to benefit from the ongoing enterprise demand for AI and automation.
With strong Q1 earnings, rising software revenues, and bullish analyst sentiment, IBM is once again proving that it’s more than just a legacy tech company—it’s a major AI and hybrid cloud player to watch through 2025 and beyond.