IBM’s Q4 Beat Spurs Target Hike to $330 as Valuation Debate Intensifies

Overview

• Bernstein raised its price target to $330 but kept a Market Perform rating, warning the shares look fully valued with potential AI-driven devaluation risk and noting some quantum upside already appears priced in.
• IBM topped estimates on revenue, earnings per share, and free cash flow, with its FY26 outlook pointing to roughly one percentage point of margin expansion and about $15.7 billion in free cash flow.
• Shares climbed about 5% following the results, closing near $309 as investors focused on momentum in generative AI, hybrid cloud, and the latest mainframe cycle.
• Jim Cramer urged investors to buy IBM, calling it a rare AI winner trading at roughly 25 times this year’s earnings and highlighting 17 consecutive quarters of earnings beats.
• Other firms boosted targets after the report, including Argus to $360 (Buy) and RBC to $361 (Outperform), while IBM reaffirmed plans to close the Confluent acquisition by mid-2026 with an expected ~$600 PTI hit in H2 2026 and accretion to adjusted EBITDA in FY27 and free cash flow in FY28.