Shares of IBM (NYSE:IBM) climbed over 2% in premarket trading Friday after the technology giant received an upgrade from Evercore ISI analysts.
Notably, analysts hiked IBM’s stock rating from In Line to Outperform and raised the price target from $165 to $200. The new price objective implies an upside potential of nearly 20%.
Evercore believes the company is “well positioned to benefit from a host of tailwinds in CY24 and beyond” fueled by a mix of “Enterprise IT spend improving to drive productivity and AI centric tailwinds that could drive upside to consulting and software segments overtime.”
“We think as Enterprises look to deploy AI tools to enhance productivity – the process will be complicated and messy, furthermore we think data security and not running enterprise data on public LLM models will be a key focus,” analysts wrote.
With their strong variation of consulting and software assets, Evercore believes IBM is well-positioned to “help solve this bottleneck and enable enterprise customers to deploy AI tools on and off premise more seamlessly.”
The analysts see IBM as “an overlooked beneficiary of increasing AI adoption,” with the technology contributing to the company through software uplift, consulting services, and streamlining internal operations.
Analysts also highlighted the potential for AI to drive demand for IBM's Watsonx software suite and other AI products, leading to significant revenue growth in the Data & AI business.