JPMorgan’s senior analyst Brian Essex believes International Business Machines (IBM) shares are poised for significant gains in the back half of 2026.
In a research note this morning, Essex upgraded his rating on IBM to “Overweight” and raised his price target to $291, signaling potential upside of about 11% from current levels.
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His bullish call brings much-needed reprieve to IBM stock that’s currently down about 10% versus the start of this year.
Why JPMorgan Is Bullish on IBM Stock
According to Brian Essex, the market is underappreciating IBM’s software business that continues to “drive better recurring revenue, margins, profitability, and cash flow.”
The firm’s core software pillars — hybrid cloud, automation, transaction processing, and data — are acting as a self-sustaining flywheel.
This creates a super durable foundation that can efficiently backstop and fund IBM’s infrastructure investments, positioning it for an operational liftoff later this year, he told clients.
Investors should also note that IBM shares currently pay a rather lucrative 2.59% dividend yield, which makes them even more attractive as a long-term holding in 2026.
IBM Shares to Benefit From Multiple Expansions
The true beauty of the modern IBM lies in its shifting business mix. Software now makes up about 45% of the company’s total corporate revenue, yet it commands an exciting two-thirds of its profits (consolidated).
Essex views this evolution as a massive win for IBM stock given the “higher-margin, ratable nature of software with better cash conversion and a higher-quality earnings stream.”
Over time, the software-centric model will bring a higher multiple to the NYSE-listed giant than its legacy, lower-margin hardware and services divisions ever have, he added.
Note that International Business Machines has a history of gaining about 1.5% on average in July, a seasonal trend that reinforces its near-term appeal.
How Wall Street Recommends Playing IBM
What’s also worth mentioning is that JPM isn’t the only Wall Street firm that’s keeping bullish on IBM shares for the next 12 months.
