IBM stock price rebounds 4%, analysts strongly support mainframe business

2026-02-25 01:16:20

Investing.com – IBM (NYSE:IBM) stock rose 4% on Tuesday, rebounding from a sharp decline on Monday, after several analysts defended the company’s mainframe business amid concerns sparked by Anthropic’s COBOL modernization announcement.

The stock plummeted 13% on Monday following Anthropic’s blog post about AI-powered COBOL modernization, which raised fears that IBM’s traditional mainframe workloads could be disrupted.

Evercore ISI analyst Amit Daryanani maintained an Outperform rating with a target price of $345. He stated that customers have had opportunities to migrate from mainframes for decades but continue to use the platform due to its advantages, including 100% uptime, better scale economics, local AI inference capabilities, quantum-safe encryption, and regulatory considerations in sensitive industries.

Daryanani noted that although IBM offers modernization options like watsonx Code Assistant for Z, the company’s z17 system continues to perform strongly, surpassing the z16 cycle in the first three quarters of this project.

Jefferies analyst Brent Thill maintained a Buy rating with a target price of $370. He said these concerns overlook IBM’s efforts to reimagine COBOL by directly embedding GenAI into mainframes to enable self-disruption through Java rewriting. Thill added that IBM’s software business is accelerating again and does not rely solely on mainframes but on broader momentum in hybrid cloud, AI, automation, and data.

Melius analyst Ben Reitzes pointed out that after this sell-off, IBM’s stock has fallen 29% from a high of $315 earlier this month. The current trading price is approximately 18 times the 2026 earnings per share and 16 times this year’s free cash flow.

IBM’s System-Z hardware revenue is projected to grow 48% year-over-year in 2025, accounting for 6% of total revenue, while its transaction processing software business generated $8.6 billion, representing 13% of total revenue.

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