IBM (IBM): Software Is Speeding Up, Yet Analysts’ Average Upside Is 5% Maham Fatima Sun, November 8, 2026 at 12:32 PM EST 4 min read IBM -0.57% ^DJI -0.46% ^GSPC +0.31% ^IXIC +1.09% Trade IBM on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
We just published the list of the 10 Worst Dow Stocks To Buy, and IBM (NYSE:IBM) ranks 9th on this list.
Yahoo Finance reported on November 5 that the Dow Jones Industrial Average tumbled 3.4%, or more than 1,800 points, while the S&P 500 fell 4.4% and the Nasdaq Composite sank 5.5% into correction territory. Chip stocks took the brunt of the damage, as the leading AI chipmaker fell 9% to pace Dow decliners and another chip designer plunged 17%, the outlet reported.
The slide erased the gains from a day earlier, when the Dow had jumped nearly 1,600 points after Democrats won control of both chambers of Congress, Yahoo Finance wrote on November 4. Even so, the blue-chip index finished Thursday just 1.9% below its record closing high of 54,349 from early August, according to Yahoo Finance.
For most of the week the Dow had looked like the sheltered corner of the market. Yahoo Finance reported on November 2 that the Dow edged up 0.4% while the Nasdaq dropped roughly 1% as investors rotated out of technology names and into consumer cyclical and financial services shares. One household consumer brand has divided opinion lately, and we covered why a well-known TV host is staying away from the sneaker maker after losing money on it.
On Thursday that cushion gave way, as the focus turned to what a Democratic Congress could mean for the AI buildout, and for the data centers driving it in particular, according to Yahoo Finance. Data center power and infrastructure stocks fell by double digits, and the Nasdaq 100 was recently more than 10% below its October closing high.
The reversal was fast. Shay Boloor, chief market strategist at an equity research firm, pointed out that the VIX volatility index posted its biggest one-day jump in more than two years, Yahoo Finance reported on November 5. It took the Nasdaq just six minutes to erase its entire post-election rally.
Friday brought a partial rebound. Yahoo Finance reported on November 6 that the U.S. added 165,000 jobs in October, and the Nasdaq gained 1.9% while the S&P 500 rose 1% and the Dow added 0.1%. You might also be interested in reading our piece on why a billionaire money manager and a TV host both still like the iPhone maker.
The stronger jobs data lifted Treasury yields and kept Federal Reserve policy at the center of market attention, Reuters reported on November 6, as the price-weighted index of 30 major U.S. companies held roughly flat.
IBM's average upside potential, based on analysts' average price target, is 5%. It has a short interest of 2.11% and had 74 hedge fund holders as of Q2 2026.
IBM's third quarter showed its software business speeding up. Software revenue rose 8%, led by Red Hat's hybrid cloud products and a 19% jump in data products, and the company said revenue growth accelerated and exceeded expectations for the period.
The profit side improved too. Operating pre-tax margin widened, and free cash flow of $3.0 billion was higher than a year earlier. Management responded by raising its full-year free cash flow outlook to growth of more than $1 billion, while holding its revenue growth range steady at the level it gave earlier in the year.
Chief Executive Arvind Krishna said clients are now using what he calls Super Intelligence to reshape entire operating models rather than solve narrow problems. Chief Financial Officer James Kavanaugh credited demand across the portfolio and strong operational execution for the quarter. Infrastructure revenue and transaction processing software also rose, so the improvement reached beyond a single product line. Hybrid cloud, data and transaction processing software all grew, while consulting held steady. Operating cash flow also rose from a year earlier, and IBM kept returning cash to shareholders through its dividend.
Our analysis on IBM (IBM) is available here: IBM (IBM) Saw Mainframes Fall 42%. Is That Already Priced In at 18 Times Earnings?
While we acknowledge the risk and potential of IBM as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than IBM that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock.
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This article is originally published at Insider Monkey.
