Wedbush analysts maintained an Outperform rating on IBM, increasing their 12-month price target from $325 to $340. The upgrade reflects confidence in IBM’s position in generative AI and hybrid cloud services, despite its modest top-line outlook. The firm cited the company’s strong consulting backlog and renewed customer interest in AI deployments as key drivers that warrant a premium valuation compared with peers.

In the fourth quarter, IBM reported revenue of $19.69 billion, up 12.1% year-over-year, surpassing consensus expectations by roughly $0.5 billion. Software sales grew 14% led by double-digit gains in data and automation offerings, while infrastructure revenue rose 21%, driven by a 67% increase in mainframe sales. Adjusted earnings per share came in at $4.52, beating the Street by $0.22 and marking a 15% improvement over last year.

IBM’s generative AI order book now exceeds $12.5 billion, underscoring robust demand for AI consulting and platform services. However, management reiterated full-year revenue growth guidance of approximately 5% at constant currency, drawing attention to the recent $11 billion acquisition of Confluent and slowing momentum from the Red Hat integration. Free cash flow is projected to rise by about $1 billion in 2026, and the board approved a quarterly dividend of $1.68 per share.