After a sharp selloff that erased more than a fifth of its value this year, International Business Machines Corp (NYSE:IBM) has won a ratings upgrade from UBS, which said the stock’s recent decline has made its risk-reward profile more balanced.
UBS upgraded IBM to “Neutral” from “Sell” and maintained its 12-month price target of $236, implying roughly 3% upside from the current price of $228.60.
IBM shares have fallen 22% so far in 2026 and have significantly underperformed the broader market over the past year following several uneven quarters in 2025. UBS said that pullback has brought the company’s valuation more in line with its modest growth outlook.
The bank expects IBM to grow revenue by about 3% to 4% annually over the next several years. At current levels, the stock trades at about 18.5 times UBS’s 2026 earnings estimate and 17.5 times its 2027 forecast, which are levels the firm views as reasonable given that growth profile.
UBS said its previous “Sell” rating was driven by inconsistent execution, reliance on acquisitions to support growth and a valuation that looked high compared with faster-growing technology peers.
After the recent de-rating, IBM now trades at a mid-teens discount to the broader market, the bank said.
Investors remain concerned about the impact of artificial intelligence across IBM’s businesses. Some worry that AI tools could reduce demand for legacy systems, including those tied to older programming languages such as COBOL, potentially pressuring IBM’s infrastructure and transaction-processing operations.
UBS said many of those risks appear to be reflected in the current share price. The firm does not expect widespread abandonment of IBM’s mainframe systems in the near term, citing strong customer relationships, strict data-sovereignty requirements and the company’s integrated technology platform.
Slower growth at Red Hat and muted performance in IBM’s consulting unit have also weighed on sentiment, UBS said. Still, with much of the uncertainty priced in, the bank concluded that downside risk is now more limited, prompting the upgrade to Neutral.