IBM falls; Stifel cuts PT on AI spending shift ahead of Q2 report
IBM•IBM shares fall after Stifel cuts target
** Shares of software and consulting company IBM fell 1.2% to $210.20 in premarket trading.
** Stifel cut its price target on IBM to $235 from $290, while still implying a 10.5% upside to the stock's last close.
AI spending shift and weaker visibility weigh on outlook
** IBM's preliminary second-quarter results came in well below consensus last week. The company attributed this to reprioritizing capital expenditure toward AI-related compute.
** The brokerage said the proliferation of AI use cases within enterprises may be affecting new workloads running on IBM's mainframe computing business, which it estimates represents about 20% of revenue.
** It added that limited visibility and a seasonally weak third quarter can weigh on the stock until the fourth-quarter report.
** IBM is scheduled to report second-quarter results on July 22.
** Fourteen of 22 brokerages rate the stock "buy" or higher, 10 rate it "hold" and two rate it "sell" or lower; the median price target is $263.11, according to data compiled by LSEG.
** Up to the last close, the stock had fallen about 28% this year.
