IBM: AI and Hybrid Cloud Strategy Supports $290 Price Target

AI Stocks on the Move This Week

We have recently published a list of 10 AI stocks generating notable interest this week. This article will delve into the position of International Business Machines Corporation (NYSE: IBM) compared to other AI stocks that are currently in the spotlight.

The AI Arms Race: U.S. vs. China

The question of whether China is making significant strides in the AI arms race remains complex. Executives from leading artificial intelligence companies suggest that the country needs modifications in its infrastructure and an uptick in exports to maintain its competitive edge.

Insights from U.S. Senate Hearing

During a U.S. Senate hearing held last Thursday, leaders from major American AI companies underscored that despite the U.S. maintaining a lead in the AI landscape, Washington must enhance infrastructure and support AI chip exports to stay ahead of China’s advances. This meeting further emphasized the need for the U.S. to take substantial steps to preserve its AI superiority in light of competitive pressures.

The Role of U.S. Senate Commerce Committee

The U.S. Senate Commerce Committee, led by Republican Senator Ted Cruz, is seeking to eliminate regulatory barriers that hinder the growth of artificial intelligence in the country. This initiative follows China’s recent successes in AI technology, including cost-effective AI models from DeepSeek and a sophisticated AI chip produced by Huawei.

Pressure for Favorable Policy Changes

In response to these developments, the U.S. tech sector is advocating for favorable policy changes from the Trump administration, including the potential easing of restrictions on AI chip exports. The leaders in the AI field are emphasizing the critical importance of favorable policies to sustain U.S. leadership in the industry.

“The number-one factor that will define whether the U.S. or China wins this race is whose technology is most broadly adopted in the rest of the world. The lesson from Huawei and 5G is that whoever gets there first will be difficult to supplant.”

Testimony from Key AI Figures

Sam Altman, the CEO of OpenAI, also testified at the Senate hearing, expressing his belief that advancements in society stemming from AI will accelerate over the next few years through innovative efforts in the U.S. He added that investing in infrastructure is crucial for fostering this growth.

AI Leaders Urge Legislative Action

In a separate written testimony reviewed earlier by news outlets, it was revealed that AI leaders are calling on U.S. lawmakers to streamline federal permitting processes for the energy requirements of artificial intelligence and to initiate more government data sets for AI training purposes.

“America’s advanced economy relies on 50-year-old infrastructure that cannot meet the increasing electricity demands driven by AI, reshoring of manufacturing, and increased electrification.”

Investigating AI Stocks

This analysis includes AI stocks identified through a thorough review of news articles, stock evaluations, and press releases. These stocks are also trending among hedge funds, with data reflecting hedge fund activities as of the fourth quarter of 2024.

IBM’s Position in the Market

International Business Machines Corporation (NYSE: IBM) is a prominent player in the technology sector, recognized as a pioneer in artificial intelligence. The company offers a range of AI consulting services and a suite of software products designed to facilitate AI integration. Recently, analysts from Stifel maintained a “Buy” rating on IBM’s stock, setting a target price of $290, following the company’s recent investor event during its annual user conference.

Highlights from IBM’s Annual User Conference

During the conference, analysts highlighted the strategies IBM is implementing to leverage AI and hybrid cloud technologies, particularly through platforms like Red Hat. The analysis pinpointed three key areas that could drive IBM’s earnings growth in both the short and long term. Firstly, IBM’s commitment to internal AI deployment is expected to enhance their investments in research, development, marketing, and other areas, contributing to margin expansion and free cash flow growth.

Future Prospects for IBM

Secondly, IBM’s watsonx Orchestrate, a generative AI and automation solution, is noted for its potential as a commercial product designed to help businesses enhance productivity. Lastly, the upcoming generation of IBM’s mainframe technology, z17, is anticipated to reclaim workloads that have transitioned to x86 servers and cloud environments. Analysts conclude their outlook on IBM with an optimistic view, stating that the company’s growth focus now appears stronger than ever.

Overall Performance of IBM as an AI Stock

Currently, IBM ranks eighth on our list of AI stocks making waves this week. While we recognize the investment potential that IBM presents, our analysis indicates that there are other AI stocks that may offer even greater promise for higher returns within a shorter timeframe. For instance, there is one AI stock that has shown an increase since the beginning of 2025, whereas many popular AI stocks have seen declines of approximately 25%. If you are interested in AI stocks that demonstrate strong potential yet trade at less than five times their earnings, we recommend looking into our findings about this particularly appealing investment opportunity.

Further Reading Recommendations

For those interested in exploring additional investment opportunities, we suggest reviewing our lists of the 20 Best AI Stocks to Buy Now, along with the 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article was originally published on Insider Monkey.