Why Stifel Sees IBM as a “Safe Compounder” in AI

International Business Machines Corporation (NYSE:IBM) is 1 of the AI Stocks Analysts Are Watching. On January 22, Stifel expert David Grossman reiterated a Buy standing connected the banal with a $325.00 terms target. The steadfast sees IBM arsenic a harmless compounder benefiting from software-led growth, borderline enlargement potential, and adjacent upside from its post-mainframe rhythm anniversary.

According to the probe firm, IBM is trading astatine a 40% premium to equal-weight S&P 500 multiple, broadly successful enactment with its semipermanent mean scope of 20-55%, but supra the pre-2025 inclination of astir 10-20%.

This re-rating is simply a reflection of respective factors, including amended bundle execution, borderline improvement, antiaircraft characteristics, and perchance the mainframe rhythm effect.

Stifel anticipates integrated bundle maturation of astir 7-8%, accordant with 2025 performance. Software acquisitions are besides apt to supply integrated maturation tailwinds into 2027. Meanwhile, services fundamentals, which correspond astir 32% of revenue, are viewed arsenic bottoming and showing signs of humble improvement.

The steadfast sees continued scope for borderline enlargement successful years 2026/2027. Stifel noted that it is maintaining its 2026 estimates, which are broadly successful enactment with consensus. The Confluent acquisition has not yet closed and truthful isn’t reflected successful estimates, and is expected to beryllium modestly dilutive.

We are maintaining our 2026 estimates (revenue +4%, cc margins +75bp, EPS +8%/$12.23, FCF +7%/$15bn), statement mostly successful line. Confluent acquisition not closed oregon reflected successful estimates, which we expect to beryllium modestly dilutive to 2026/2027 EPS/FCF (known). We estimation stronger USD reduced 2026 f/x tailwind from 90bp to 40bp. We proceed to urge IBM for antiaircraft minded investors.

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.

While we admit the imaginable of IBM as an investment, we judge definite AI stocks connection greater upside imaginable and transportation little downside risk. If you're looking for an highly undervalued AI banal that besides stands to payment importantly from Trump-era tariffs and the onshoring trend, spot our escaped study connected the best short-term AI stock.

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Disclosure: None.