10 Trending AI Stocks on Wall Street

5. International Business Machines Corporation (NYSE:IBM)

Number of Hedge Fund Holders: 66

International Business Machines Corporation (NYSE:IBM) is one of the 10 Trending AI Stocks on Wall Street. On January 13, BofA Securities analyst Wamsi Mohan raised the price target on the stock to $335.00 (from $315.00) while maintaining a Buy rating. Firm analysts see robust FCF outlook for IBM, along with higher-margin software mix; offsetting near-term headwinds.

Following a robust year in 2025, firm analysts believe IBM is up for a more modest year due to a weaker close to F25 and several headwinds in F26. Analysts anticipate softer PTI margin driven by workforce rebalancing initiatives when IBM reports on F4Q25 on Jan 28^th.

BofA also estimates a workforce rebalancing expense of $400mn in 4Q, which is expected to limit full-year 2025 PTI margin expansion to about 70bps. This is below management guidance of 100 bps. It also anticipates lower taxes to be a partial offset to EPS.

The firm anticipates about 5% revenue growth in 2026, led by robust software growth and modest infrastructure growth, and flat growth in infrastructure. Meanwhile, the Confluent deal could add to software revenue in 2026, though likely to be modestly earnings dilutive.

“For F26, IBM likely guides SW cc rev growth of ~10%, LSD% cc in Consulting, and flat cc in Infra totaling 5% cc growth for IBM (organic ~4%). CFLT is projected to close mid- year, and we assume +2% inorganic rev growth contribution to SW. We adjust our F26 numbers to reflect dilution of ~$0.40 with a minimal impact on FCF. For FCF, we model $14.0bn for F25 and expect a guide of ~$15bn in F26, maintaining 130% NI/FCF ratio. Overall, we are cautious on 4Q given workforce rebalancing and lower growth in SW. Reit. Buy on higher margin SW revs, strong FCF growth, and optionality from QC.”

International Business Machines Corporation (NYSE:IBM) is a multinational technology company and a pioneer in artificial intelligence, offering AI consulting services and a suite of AI software products.