International Business Machines (NYSE:IBM) may be one of tech’s oldest giants, but its stock potential continues to draw investor interest. Strong fundamentals, coupled with a growing focus on artificial intelligence (AI) and hybrid cloud, have fueled optimism in 2025. Even after hitting a 52-week high of $324.90 on Nov. 12, Oppenheimer analysts argue there’s still room to run, giving IBM stock an “Outperform” rating and a $360 price target—the highest on Wall Street so far.
Analyst Param Singh highlights that investors often underestimate IBM stock potential, seeing it as a legacy tech company. In reality, IBM is transitioning to a software-first business, driven by acquisitions like HashiCorp and continuing strength from Red Hat. Singh believes IBM’s growing push into generative AI and AI applications represents untapped upside that the market has not fully priced in.
Overview of IBM’s Business and Stock Performance
Founded in 1911, IBM is a global leader in hybrid cloud, AI, and enterprise consulting services. The company supports clients in over 175 countries across industries such as finance, healthcare, and telecommunications. IBM’s Red Hat OpenShift platform enables secure, scalable digital transformations, while ongoing innovation in AI, quantum computing, and cloud solutions provides new growth avenues.
In 2025, IBM shares have climbed 38.5%, outperforming the broader S&P 500 Index (S&P:SPX), which rose roughly 15%. The company’s market capitalization stands around $284 billion, reflecting investor confidence in IBM stock potential. Its consistent dividend history further adds appeal for income-focused investors, with a quarterly payout of $1.68 per share, representing a 2.26% yield and maintaining its Dividend Aristocrat status.
Key Highlights From IBM’s Q3 2025 Earnings
IBM’s third-quarter results reinforced the bullish case for IBM stock potential. Revenue came in at $16.3 billion, up 9% year-over-year, beating analyst expectations of $16.1 billion. Net income surged to $1.74 billion, or $1.84 per share, recovering from a $330 million loss in Q3 2024. Adjusted EPS climbed 15.2% year-over-year to $2.65, comfortably exceeding Wall Street estimates of $2.44.
Software revenue reached $7.2 billion, up roughly 10%, fueled by automation tools and Red Hat/OpenShift momentum. Infrastructure revenue jumped 17% year-over-year to $3.6 billion, driven by IBM Z mainframes. Consulting revenue returned to growth at approximately $5.3 billion. Free cash flow rose $300 million to $2.4 billion, while cash and equivalents totaled $14.9 billion, underscoring strong financial health.
CEO Arvind Krishna emphasized IBM’s AI traction, noting that the company’s AI book of business now exceeds $9.5 billion, up from $7.5 billion in the previous quarter.
Analyst Outlook on IBM Stock Potential
Wall Street remains bullish overall, with a consensus rating of “Moderate Buy.” Of 22 analysts covering the stock, eight rate it “Strong Buy,” one as “Moderate Buy,” 11 as “Hold,” and two as “Strong Sell.” Despite IBM exceeding the average price target of $289.62, Oppenheimer sees significant upside.
The $360 price target implies potential gains of 18.2% from current levels, reflecting optimism that software growth, AI adoption, and margin expansion will drive a valuation reset. Analysts believe the market is only beginning to appreciate IBM’s evolution from a legacy hardware player into a high-value software and AI company.
Bottom Line on IBM Stock Potential
IBM stock potential is strong, supported by solid Q3 earnings, AI-driven growth, and hybrid cloud leadership. With Oppenheimer’s bullish outlook and continued investor interest in AI and enterprise software, IBM (NYSE:IBM) appears well-positioned for further upside in 2025 and beyond. Investors should watch for additional catalysts in AI, software adoption, and strategic acquisitions as IBM continues its transformation.
Investors should also consider IBM’s strong balance sheet and consistent dividend growth as a cushion against market volatility. Strategic partnerships, AI expansion, and hybrid cloud adoption could further amplify IBM stock potential over time.
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Author Stephanie Bédard-Châteauneuf 
