Jefferies analysts have recently evaluated IBM’s position in the market and initiated shares at Hold with a $180 per share price target. Despite being encouraged by IBM’s software momentum, the analysts do not see a breakout play on the horizon. However, they highlight IBM’s strategic moves to reposition itself as a software-led story, including the acquisition of Red Hat, the spinoff of Kyndryl, and investments in AI and its software go-to-market strategy.
Interestingly, Jefferies deems IBM as a “hidden AI play,” suggesting that IBM’s consulting arm may have more potential in the AI space compared to its software capabilities. With IBM’s Watson platform, the company has significant exposure to Gen AI workloads. However, the analysts believe that the immediate AI opportunity lies within IBM’s strategic consulting arm. Many customers are still in the early stages of their Gen AI strategies and will require guidance on effectively utilizing AI technologies.
While there are positive aspects, Jefferies notes that IBM’s revenue growth is below that of its software peers and that it operates at lower margins. This raises concerns about the stock’s potential for substantial upside without a significant acceleration in software.
In conclusion, although Jefferies analysts commend IBM for its software momentum and strategic moves, they believe that the company’s consulting arm holds the key to tapping into the AI market. As customers increasingly seek assistance in navigating the implementation of AI technologies, IBM’s strategic consulting expertise positions it as a significant player in this evolving landscape.
The source of the article is from the blog rugbynews.at