JPMorgan Chase reports that IBM has successfully transitioned over the past decade from a hardware-centric model to a software-led platform focused on hybrid cloud and artificial intelligence. Analysts highlight that software now constitutes approximately 45% of total revenue while generating roughly two-thirds of combined profits, driven by higher margins and efficient cash conversion.

Consequently, JPMorgan Chase upgraded IBM’s rating from Neutral to Overweight and increased the price target from $270 to $291. The firm views the shift toward high-quality earnings streams in the software sector as a key catalyst for supporting a higher valuation multiple compared to traditional hardware and services.