BofA lifts IBM target, sees strong cash flow despite near-term margin pressure

2 weeks ago 13

Ghazal Ahmed

Sun, January 18, 2026 astatine 3:54 PM CST 2 min read

International Business Machines Corporation (NYSE:IBM) is 1 of the Trending AI Stocks connected Wall Street. On January 13, BofA Securities expert Wamsi Mohan raised the terms people connected the banal to $335.00 (from $315.00) portion maintaining a Buy rating. Firm analysts spot robust FCF outlook for IBM, on with higher-margin bundle mix; offsetting near-term headwinds.

Following a robust twelvemonth successful 2025, steadfast analysts judge IBM is up for a much humble twelvemonth owed to a weaker adjacent to F25 and respective headwinds successful F26. Analysts expect softer PTI borderline driven by workforce rebalancing initiatives erstwhile IBM reports connected F4Q25 connected Jan 28^th.

BofA besides estimates a workforce rebalancing disbursal of $400mn successful 4Q, which is expected to bounds full-year 2025 PTI borderline enlargement to astir 70bps. This is beneath absorption guidance of 100 bps. It besides anticipates little taxes to beryllium a partial offset to EPS.

The steadfast anticipates astir 5% gross maturation successful 2026, led by robust bundle maturation and humble infrastructure growth. Meanwhile, the Confluent woody could adhd to bundle gross successful 2026, though apt to beryllium modestly net dilutive.

"For F26, IBM apt guides SW cc rev maturation of ~10%, LSD% cc successful Consulting, and level cc successful Infra totaling 5% cc maturation for IBM (organic ~4%). CFLT is projected to adjacent mid- year, and we presume +2% inorganic rev maturation publication to SW. We set our F26 numbers to bespeak dilution of ~$0.40 with a minimal interaction connected FCF. For FCF, we exemplary $14.0bn for F25 and expect a usher of ~$15bn successful F26, maintaining 130% NI/FCF ratio. Overall, we are cautious connected 4Q fixed workforce rebalancing and little maturation successful SW. Reit. Buy connected higher borderline SW revs, beardown FCF growth, and optionality from QC."

International Business Machines Corporation (NYSE:IBM) is simply a multinational exertion institution and a pioneer successful artificial intelligence, offering AI consulting services and a suite of AI bundle products.

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