IBM gains Barclays backing as quantum investment plan lifts stock outlook

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IBM backed by Barclays on quantum

Highlights

Barclays initiated IBM coverage with an overweight rating and a 12-month price target of $350, projecting 18% upside from Friday's close.
IBM announced a plan to invest over $10 billion in quantum computing by 2029, aiming to develop fault-tolerant quantum computers within five years.
IBM shares surged more than 8% Monday and are up almost 40% in the past month, with 14 out of 24 analysts rating the stock buy or strong buy.

Quantum strategy and investment timeline

As reported by CNBC citing Barclays, the bank has initiated coverage on IBM with an overweight rating and a 12-month price target of $350, implying 18% upside from Friday's close. IBM shares rise more than 8% on Monday, and Barclays' bull-case target stands at $449, or 51% above the last close.

Analysts led by Raimo Lenschow say IBM combines mid-single-digit organic revenue growth with margin leverage, while also offering additional upside from quantum computing if its execution succeeds. IBM disclosed in a filing to federal securities regulators on May 28 that it plans to invest more than $10 billion in quantum computing over the next five years, with the goal of developing fault-tolerant quantum computers by 2029.

Barclays says IBM is following a playbook similar to Nvidia's approach in emerging computing markets. The bank says IBM is trying to expand its quantum customer base by building software, tools and a developer environment that can encourage wider adoption.

Market momentum and industry implications

The quantum computing market is still relatively small, with Grand View Research valuing it at $1.4 billion in 2024, but investment across the sector is accelerating. In May, the U.S. Department of Commerce says it will grant $2 billion to nine domestic quantum computing companies, while Alphabet and Amazon have also introduced chips tied to the technology in recent years.

Barclays argues IBM still has time to benefit as an early mover because the sector remains in its early stages. Lenschow says quantum computing could become the next major computing paradigm after the central processing unit and GPU eras, particularly for simulation, optimization and materials discovery.

The bank's view broadly aligns with wider Wall Street sentiment. Of 24 analysts covering IBM, 14 rate the stock buy or strong buy, according to LSEG data, while FactSet data shows the shares are up almost 40% over the past month.

In our earlier article on IBM’s bullish price action, we highlighted that the stock was trading well above key moving averages as momentum indicators strengthened, while overbought readings increased the risk of short-term volatility. We also noted that improving operational efficiency and strategic expansion helped support the outlook, with the $320 area flagged as an important level that could influence the next directional move.

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