International Business Machines Corporation (IBM) is in a favorable position to invest in, according to Bank of America stock analysts. The stock market suffered a sharp sell-off Monday following Chinese startup Deepseek AI’s latest breakthrough. Top tech stocks and investors like Nvidia and Microsoft saw dips in their stock value, and are since on the mend. With IBM being one of these stocks, BofA analysts suggest that now may be a good time to buy the dip.
Analysts at Bank of America believe that the pullback created idiosyncratic buy opportunities in certain stocks. The banking institution cites IBM’s defensive nature and potential for growth amid market volatility. Despite DeepSeek’s impact on tech Monday, IBM is still up around 1% in the last five days, showing strength.
Bank of America Projects Big Things for IBM
For IBM, BofA also highlighted catalysts including a new mainframe cycle, acceleration in its Software division, and mergers and acquisitions activity. Additionally, analysts project higher growth in Software for the next three years, driven by Enterprise AI opportunities and the launch of a new Mainframe (z17) in 2025. “For IBM, AI represents an opportunity in its Consulting business as it seeks to position itself as the go-to partner of choice for AI consulting,” BofA says in a note.
Furthermore, IBM is scheduled to report fourth-quarter 2024 earnings on Jan. 29, after the closing bell. According to forecasts in the to-be-reported quarter, the company is likely to have recorded higher revenues from the Software segment with a strong focus on product innovation and healthy AI traction. Analysts at Zacks project total revenues for the company to be $17.56 billion. It generated revenues of $17.38 billion in the prior year quarter. The consensus mark for earnings is currently pegged at $3.74 per share, indicating a decline from $3.87 in the year-earlier quarter.
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IBM stock has surged 65% over the past three years thanks to new leadership. In 2021, IBM’s cloud chief Arvind Krishna took the helm as its new CEO. Following Krishna’s appointment, IBM’s revenue grew at a CAGR of 4% from 2021 to 2023. Its EPS increased at a CAGR of 13%. That surprising stabilization caused IBM’s stock to nearly double over the past four years, roughly matching Microsoft’s gains.