Why IBM’s High Valuation Has Analysts Concerned

International Business Machines Corporation (NYSE:IBM) is one of the Buzzing AI Stocks on Wall Street.  On August 14, Erste Group analyst Hans Engel downgraded the stock from Buy to Hold, reflecting the challenges IBM is facing in accelerating its revenue growth to contest broader technology sector performance.

According to the analysts, IBM’s sales growth is “well below” the sector average which isn’t expected to change this year. They believe that current valuation is “high in view of the below-average growth prospects.”

“IBM’s sales growth is well below the sector average. This is not expected to change this year either. The Group’s latest forecast for 2025 assumes moderate revenue growth of at least +5% (y/y). The free cash flow forecast has been left at USD 13.5 bn. The current P/E ratio of the stock is high in view of the below-average growth prospects.”

Why IBM’s High Valuation Has Analysts Concerned

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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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