RBC Calls International Business Machines Corporation (IBM) a Defensive AI Play as Red Hat Headwinds Ease

International Business Machines Corporation (NYSE:IBM) is one of the AI Stocks in Focus on Wall StreetOn January 27, RBC Capital analyst Matthew Swanson reiterated an Outperform rating on the stock with a $350.00 price target. The firm favors IBM’s secular positioning ahead of its earnings report on January 28.

RBC anticipates that IBM will report solid results with upside to overall revenue and free cash flow. With earnings due today, investors will be particularly watching out if the company can maintain its recent momentum.

In particular, the firm mentioned how the subcomponents of software revenue will remain in focus. Management had noted how Red Hat will continue to face pressure throughout the year, but this weakness is expected to ease and will allow for growth to pick up again in fiscal 2026.

Overall, RBC Capital continues to like IBM as a defensive AI play, maintaining its Outperform rating on the stock.

“We continue to like IBM as a defensive play with secular exposure to hybrid, AI and a longer-term opportunity in quantum. We maintain our OP rating and $350 PT.”

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.

While we acknowledge the risk and potential of IBM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than IBM and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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