International Business Machines Corporation (NYSE:IBM) saw its stock rise 1.02% to $302.59 in premarket trading on Tuesday, following a 3.45% gain on Monday that closed at $299.52. The upward momentum comes as BofA Securities raised its price target for IBM to $330 from $315, maintaining a buy rating.
BofA's Bullish Outlook
BofA analyst Wamsi Mohan expects a "solid quarter and guidance raise" when IBM reports its second-quarter results on July 22. He pointed to potential upside from "faster Confluent synergies and stronger growth in software and power and storage in infrastructure." The bank estimates Confluent will contribute $340 million to IBM's Q2 revenue, representing 1.9% of its $18.0 billion full-year revenue forecast.
IBM's Q1 results showed revenue growth of 9% to $15.9 billion, with software revenue climbing 11% to $7.1 billion. Red Hat grew 13%, and IBM Z jumped 51%. CEO Arvind Krishna noted that "AI continues to be a tailwind" for the company, which still expects over 5% constant-currency revenue growth for 2026 and about a $1 billion year-over-year increase in free cash flow.
Confluent Acquisition Details
IBM completed its acquisition of Confluent in March, paying $31 per share in cash, putting Confluent's enterprise value near $11 billion. Sanjeev Mohan, principal analyst at SanjMo, said the move addresses a data gap as AI agents and automated workflows require "live operational signals" rather than historical data.
New Hardware Launch
On Tuesday, IBM introduced new z17 and LinuxONE 5 systems, adding rack-mount and single-frame configurations to its Z and LinuxONE lineup. The new models support up to 82 cores and 18 TB of memory, representing about 20% more cores and 12% more memory than previous systems. Shipping begins August 12. Tom McPherson, head of IBM Z and LinuxONE, said, "The number of mission-critical workloads is rising at an incredible pace."
Quantum Computing Milestone
Monday's headlines were dominated by IBM's quantum computing breakthrough. In collaboration with Oak Ridge National Laboratory and Cleveland Clinic, IBM used quantum computers to calculate nine molecular configurations of FLiBe, a compound used in tritium extraction for fusion fuel. Tom Beck at ORNL called quantum computers "key tools" for discovery, while IBM's Jerry Chow said the study demonstrates quantum-centric supercomputing as a "practical scientific tool."
Market Context
Despite the recent gains, IBM shares remain about 9% below their 52-week high of $332.46. Monday's trading volume was 7.18 million shares, about 84% of the 65-day average. The broader market showed mixed signals, with Nasdaq 100 futures slipping 0.98% amid a drop in chip stocks, while Dow futures edged up 0.18%. Microsoft, Salesforce, and IBM all moved higher along with other software shares.
Outlook
With the stock climbing back toward its June peak, all attention now turns to the July 22 earnings report. Investors will be watching to see if Confluent, Red Hat, and the new z17 sales can support IBM's software narrative and justify the raised price target.
