IBM Stock Jumps 4% as JPMorgan Upgrades and Trump Backs Quantum Push

TLDR

• JPMorgan upgraded IBM to Overweight with a $291 price target, up from $270
• IBM stock rose more than 4% to around $263, outperforming a weak broader market
• IBM’s software business makes up ~45% of revenue but nearly two-thirds of consolidated profit
• President Trump signed two executive orders backing quantum computing, praising IBM CEO Arvind Krishna
• IBM has pledged $10 billion in quantum research over five years; Q2 earnings due July 22

IBM got a double shot of good news on Tuesday, and the market noticed.

International Business Machines Corporation, IBM

JPMorgan analyst Brian Essex upgraded IBM stock to Overweight from Neutral and raised his price target to $291 from $270. The stock jumped more than 4% to around $263.20, even as Nasdaq futures dropped 2.66% and S&P 500 futures fell 1.30%.

Essex’s case is simple: IBM’s software business is the engine, and it’s only getting more important. Software accounts for roughly 45% of IBM’s revenue but drives nearly two-thirds of its total profit. With AI adoption growing, Essex expects that mix to keep shifting in software’s favor.

IBM has made around 50 acquisitions over the past five years to fuel that shift, including the high-profile purchase of Confluent in March. Some analysts have questioned the pace of spending. Essex’s view is that investing heavily in software now will reduce that need later, and over time move IBM toward recurring subscription revenue.

He also flagged room for valuation upside if IBM gains traction as an AI infrastructure player, or if it accelerates its timeline on quantum computing.

Quantum Gets a White House Boost

The upgrade wasn’t the only catalyst. President Trump on Monday signed two executive orders tied to quantum technology — one mandating the creation of a research-grade quantum computer by 2028, and another accelerating the government’s move to post-quantum cryptography by 2031.

IBM CEO Arvind Krishna attended the Oval Office signing. Trump later said he regretted selling his IBM stock too soon. That kind of public endorsement doesn’t hurt.

IBM and the Commerce Department also jointly pledged $1 billion earlier this year to build Anderon, a standalone quantum foundry. IBM then committed an additional $10 billion in quantum research and manufacturing over the next five years.

Essex noted IBM has already secured over $1.1 billion in quantum customer contracts since 2017 and crossed $1 billion in cumulative quantum revenue. He sees IBM as well positioned in what he calls a “meaningful total addressable market” for quantum.

IBM’s own target is to deliver its most powerful quantum system, Starling, by 2029. Essex said any pull-forward on that timeline “could result in upside.”

What Analysts Are Saying

IBM has been collecting bullish ratings. Barclays initiated coverage at Buy earlier this month with a $350 price target, and Citigroup has a Buy rating with a $375 target. Wedbush rates it Outperform with a $320 target.

On Monday, IBM also said it joined OpenAI’s Daybreak Cyber Partner Program and launched a new AI-powered application security service to help businesses find and fix software vulnerabilities faster.

The service uses OpenAI’s capabilities to scan code, prioritize high-risk flaws, and identify exploitable paths. It builds on Project Lightwell, IBM’s $5 billion initiative with Red Hat focused on software supply chain security.

IBM reports Q2 earnings on July 22. Wall Street expects earnings per share of $3.00, up from $2.80 a year ago, on revenue of $17.85 billion versus $16.98 billion in the prior-year quarter.

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