Soared by Seven Times the Nasdaq Gain... This Stock Rises on Quantum Computer Hopes

Korea Economic Daily

Summary

The share price of U.S. tech giant IBM has surged 31.92% this year on expectations for next-generation technology businesses like AI and quantum computers, far outpacing the rise of the Nasdaq Composite Index.
Several investment institutions have raised their price targets, reflecting a high opinion of IBM's growth and defensiveness.
Some are also suggesting the possibility of a correction following the recent sharp stock price increase.

The share price of U.S. tech giant IBM is climbing swiftly, driven by expectations for next-generation technology businesses such as artificial intelligence (AI) and quantum computers.

On the 9th (local time) on the New York Stock Exchange, IBM closed at $290.14, up 31.92% so far this year. This significantly outpaces the S&P 500 (6.73%) and the Nasdaq Composite Index (4.55%) during the same period. The rise also surpasses NVIDIA’s gain (17.76%) for this period. On the 30th of last month, IBM ended trading at $294.78, marking its all-time high.

The company’s stock is rising on the back of expectations surrounding its AI, cloud, and quantum computer ventures. IBM operates B2B AI business through its data and AI platform Watsonx. Designed as a solution for enterprises to develop, deploy, and manage AI, IBM has recently expanded collaborations with companies such as Roche, Ferrari, and Firefly.

Last month, IBM unveiled plans to develop the quantum computer 'Quantum Starling,' aiming to create a machine that is resistant to large-scale errors.

IBM’s revenue for Q1 was $14.54 billion, surpassing the market consensus of $14.4 billion. Its earnings per share (EPS) reached $1.60, exceeding Wall Street’s estimate of $1.40. IBM will announce its results for Q2 this year on the 23rd.

Wall Street is also steadily raising its price targets for IBM. On the 2nd, Goldman Sachs raised IBM’s price target to $310 from $270. On the 20th of last month, Wedbush bumped up its goal from $300 to $325. Daniel Ives, an analyst at Wedbush, said, “IBM’s stock remains undervalued,” adding, “With AI and the cloud as growth engines, IBM is at the beginning of a multi-year ‘renaissance’ of growth.”

BofA raised its price target for IBM twice last month, projecting that the stock could reach $320. Wamsi Mohan, a BofA analyst, commented, “IBM is a stock that combines growth and defensive power, with recent productivity gains increasing free cash flow (FCF),” and noted, “The growth potential of generative AI and quantum computers is strong.”

Conversely, some believe the recent rally has sent the stock up too much. David Vogt, an analyst at UBS, set a price target of $195 for IBM, suggesting the price could be corrected by more than 30% from current levels.

Reporter Han-Gyeol Seon always@hankyung.com