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Should You Bet on IBM Stock Amid Rising Estimate Revisions?
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Key Takeaways
IBM's 2026 and 2027 earnings estimates rose 6.6% and 5.4%, signaling bullish sentiment.
IBM is seeing demand for hybrid cloud and AI, boosted by HashiCorp and the watsonx platform.
IBM is advancing quantum computing via AMD and Cisco partnerships targeting fault-tolerant systems by 2030.
International Business Machines Corporation (IBM - Free Report) is currently witnessing an uptrend in estimate revisions. Earnings estimates for IBM for 2026 have moved up 6.6% to $12.44 over the past year, while the same for 2027 has increased 5.4% to $13.36. The positive estimate revision portrays bullish sentiments about the stock’s growth potential.
Image Source: Zacks Investment Research
What Propels IBM?
IBM is benefiting from healthy demand trends for hybrid cloud and AI, which drive the Software and Consulting segments. The company’s growth is expected to be aided by analytics, cloud computing and security in the long run. A combination of a better business mix, improving operating leverage through productivity gains and increased investment in growth opportunities will likely boost profitability.
With a surge in traditional cloud-native workloads and associated applications, along with a rise in generative AI deployment, there is a radical expansion in the number of cloud workloads that enterprises are currently managing. This has resulted in heterogeneous, dynamic and complex infrastructure strategies, which have led firms to undertake a cloud-agnostic and interoperable approach to highly secure multi-cloud management, translating into a healthy demand for IBM hybrid cloud solutions. In addition, the buyout of HashiCorp has significantly augmented IBM’s capabilities to assist enterprises in managing complex cloud environments. HashiCorp’s tool sets complement IBM RedHat’s portfolio, bringing additional functionalities for cloud infrastructure management and bolstering its hybrid multi-cloud approach.
IBM’s watsonx platform is likely to be the core technology platform for its AI capabilities. watsonx delivers the value of foundational models to the enterprise, enabling them to be more productive. This enterprise-ready AI and data platform comprises three products to help organizations accelerate and scale AI: the watsonx.ai studio for new foundation models, generative AI and machine learning, the watsonx.data fit-for-purpose data store built on an open lake house architecture and the watsonx.governance toolkit to help enable AI workflows to be built with responsibility and transparency.
Image Source: Zacks Investment Research
IBM Rides on Quantum Computing
IBM continues to push the boundaries of quantum technology to explore solutions to complex problems beyond the reach of classical computing. The company has inked a partnership with Advanced Micro Devices, Inc. (AMD - Free Report) to develop scalable, open-source platforms that could redefine the future of computing. The next-generation computing architectures, known as quantum-centric supercomputing, will introduce a new dimension to the realm of quantum computing by enabling users to increase the complexity of algorithms in the quantum hardware. As users seek to achieve quantum advantage — where quantum computers outperform the classical ones — the new quantum-centric supercomputing could pave the way for technological innovations across the quantum ecosystem.
It has also collaborated with Cisco Systems, Inc. (CSCO - Free Report) to develop a connected network of fault-tolerant quantum computers by 2030. The companies aim to pool their individual resources and key expertise to create a pathway toward an exponentially large computational space, leading to the formation of a quantum computing Internet. This is likely to create a platform where many distributed quantum-based technologies, such as quantum computers, quantum sensors and quantum communications, are connected to share information across distances.
As part of this collaborative effort, IBM intends to develop a quantum networking unit (QNU) to serve as the interface linking several quantum computers to a quantum processing unit (QPU). This will facilitate the conversion of stationary quantum information in the QPU into "flying" quantum information for transfer across potentially multiple quantum computers through a network. Cisco is developing a high-speed software protocol framework that can continuously and dynamically reconfigure network paths to drive the quantum information transfer required for a given quantum algorithm or application.
Price Performance
IBM has jumped 9.9% over the past year compared with the industry’s growth of 135.8%, outperforming peers like Microsoft Corporation (MSFT - Free Report) but lagging Amazon.com, Inc. (AMZN - Free Report) . While Amazon has inched up 19.7%, Microsoft gained 4.4% over this period.
One-Year IBM Stock Price Performance
Image Source: Zacks Investment Research
End Note
With solid fundamentals and healthy revenue-generating potential, driven by robust demand trends, IBM appears to be a solid investment proposition. Further, a strong emphasis on hybrid cloud, diligent execution of operational plans and AI focus are driving more value for customers. Moreover, with improving earnings estimates, the stock is witnessing a positive investor perception at the moment.
Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock.
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Should You Bet on IBM Stock Amid Rising Estimate Revisions?
Key Takeaways
International Business Machines Corporation (IBM - Free Report) is currently witnessing an uptrend in estimate revisions. Earnings estimates for IBM for 2026 have moved up 6.6% to $12.44 over the past year, while the same for 2027 has increased 5.4% to $13.36. The positive estimate revision portrays bullish sentiments about the stock’s growth potential.
Image Source: Zacks Investment Research
What Propels IBM?
IBM is benefiting from healthy demand trends for hybrid cloud and AI, which drive the Software and Consulting segments. The company’s growth is expected to be aided by analytics, cloud computing and security in the long run. A combination of a better business mix, improving operating leverage through productivity gains and increased investment in growth opportunities will likely boost profitability.
With a surge in traditional cloud-native workloads and associated applications, along with a rise in generative AI deployment, there is a radical expansion in the number of cloud workloads that enterprises are currently managing. This has resulted in heterogeneous, dynamic and complex infrastructure strategies, which have led firms to undertake a cloud-agnostic and interoperable approach to highly secure multi-cloud management, translating into a healthy demand for IBM hybrid cloud solutions. In addition, the buyout of HashiCorp has significantly augmented IBM’s capabilities to assist enterprises in managing complex cloud environments. HashiCorp’s tool sets complement IBM RedHat’s portfolio, bringing additional functionalities for cloud infrastructure management and bolstering its hybrid multi-cloud approach.
IBM’s watsonx platform is likely to be the core technology platform for its AI capabilities. watsonx delivers the value of foundational models to the enterprise, enabling them to be more productive. This enterprise-ready AI and data platform comprises three products to help organizations accelerate and scale AI: the watsonx.ai studio for new foundation models, generative AI and machine learning, the watsonx.data fit-for-purpose data store built on an open lake house architecture and the watsonx.governance toolkit to help enable AI workflows to be built with responsibility and transparency.
Image Source: Zacks Investment Research
IBM Rides on Quantum Computing
IBM continues to push the boundaries of quantum technology to explore solutions to complex problems beyond the reach of classical computing. The company has inked a partnership with Advanced Micro Devices, Inc. (AMD - Free Report) to develop scalable, open-source platforms that could redefine the future of computing. The next-generation computing architectures, known as quantum-centric supercomputing, will introduce a new dimension to the realm of quantum computing by enabling users to increase the complexity of algorithms in the quantum hardware. As users seek to achieve quantum advantage — where quantum computers outperform the classical ones — the new quantum-centric supercomputing could pave the way for technological innovations across the quantum ecosystem.
It has also collaborated with Cisco Systems, Inc. (CSCO - Free Report) to develop a connected network of fault-tolerant quantum computers by 2030. The companies aim to pool their individual resources and key expertise to create a pathway toward an exponentially large computational space, leading to the formation of a quantum computing Internet. This is likely to create a platform where many distributed quantum-based technologies, such as quantum computers, quantum sensors and quantum communications, are connected to share information across distances.
As part of this collaborative effort, IBM intends to develop a quantum networking unit (QNU) to serve as the interface linking several quantum computers to a quantum processing unit (QPU). This will facilitate the conversion of stationary quantum information in the QPU into "flying" quantum information for transfer across potentially multiple quantum computers through a network. Cisco is developing a high-speed software protocol framework that can continuously and dynamically reconfigure network paths to drive the quantum information transfer required for a given quantum algorithm or application.
Price Performance
IBM has jumped 9.9% over the past year compared with the industry’s growth of 135.8%, outperforming peers like Microsoft Corporation (MSFT - Free Report) but lagging Amazon.com, Inc. (AMZN - Free Report) . While Amazon has inched up 19.7%, Microsoft gained 4.4% over this period.
One-Year IBM Stock Price Performance
Image Source: Zacks Investment Research
End Note
With solid fundamentals and healthy revenue-generating potential, driven by robust demand trends, IBM appears to be a solid investment proposition. Further, a strong emphasis on hybrid cloud, diligent execution of operational plans and AI focus are driving more value for customers. Moreover, with improving earnings estimates, the stock is witnessing a positive investor perception at the moment.
International Business Machines delivered a trailing four-quarter average earnings surprise of 7.9% on average. IBM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock.