Barclays sets eye-catching IBM stock price target

International Business Machines (IBM) spent the early part of 2026 as one of the market’s least-loved technology names. A new call from Barclays flipped that script in a flash.On June 1, the bank started coverage of IBM with an overweight rating and a 12-month price target of $350, and the stock raced to record territory the same day.The headline grabber is quantum computing, but the reason Barclays actually likes the stock sits somewhere far less glamorous, inside IBM’s enterprise software division.That distinction matters for everyday investors because it changes what you are really buying when you open an IBM position at the current price levels.Why Barclays just put a $350 price target on IBM stockBarclays analyst Raimo Lenschow opened coverage with an overweight rating, the firm’s version of a buy, Investing.com reported. His $350 target implied roughly 18% upside from the previous Friday’s close.IBM’s share price reacted fast, climbing about 9% Monday to fresh all-time highs and capping a near-30% gain in May, IBM’s best month in about 24 years, CNBC reported.More quantum and AI stocks:IBM CEO sends strong message on quantum computingWhite House makes bold $2 billion bet on quantum stocks5-star analyst sets jaw-dropping Nvidia stock price targetLenschow’s pitch is plain. He sees “a stable earnings compounder with a Quantum option,” and he is happy to pay for it, Barchart reported. Wedbush’s Daniel Ives echoed the upgrade, lifting his target to $350 from $320, BigGo reported.Here is the key point: The $350 target rests on IBM’s steady software business, not on quantum computing. Barclays expects the stock to reach $350 even if the quantum bet never pays off.Quantum only drives the more optimistic case, where Barclays sees $449, roughly 51% above the prior close. Barclays analyst Raimo Lenschow started IBM at overweight with a $350 target and a $449 bull case.Bloomberg / Getty Images The software business doing the heavy lifting at IBMSoftware now makes up nearly half of IBM’s revenue and most of its profit, and Barclays expects that share to keep rising.These are not flashy consumer apps. IBM sells infrastructure software to banks, insurers, and government agencies, clients who rarely rip systems out once they are wired in.That stickiness anchors the thesis, and Lenschow is not the first to spot it. Oppenheimer and Evercore analysts flagged the same durable software base earlier this year, Investing.com reported.Hybrid cloud, built on Red Hat’s OpenShift, ties it together by letting customers blend private and public systems instead of committing to one vendor.What IBM’s first quarter showedAdjusted earnings of $1.91 a share, up 19% from a year earlier, according to IBM’s results.Revenue of $15.92 billion, up 9% and ahead of Wall Street estimates.Software revenue up 8%, with the full-year software outlook lifted to 10% or better.IBM’s quantum option and the Nvidia playbookNow, the part that drew the crowd.Last week, IBM committed more than $10 billion to quantum computing over five years in a regulatory filing, aiming for the first large-scale, fault-tolerant machine by 2029.Quantum computers use qubits, which hold multiple states at once, to solve problems that would stall today’s fastest supercomputers for years.Related: History of IBM: Company timeline, milestones & factsThe centerpiece is Anderon, a quantum chip foundry in Albany, New York, backed by a proposed $1 billion Commerce Department award and a matching $1 billion from IBM, according to IBM's newsroom.Barclays says IBM is copying Nvidia’s ecosystem playbook, building software and developer tools to lock in users early. Appetite is hot, with peer Quantinuum’s IPO heavily oversubscribed last week.However, it is important to note that IBM’s quantum revenue is years away. For now, quantum computing works as a long-term optionality, not a current earnings driver.What still has to go right for IBM stock to hit $350The rebound appears solid, but February’s scare still lingers. IBM fell more than 20% that month on fears that Anthropic’s Claude Code could automate legacy system work and threaten IBM’s mainframe ecosystem and high-margin consulting services.Valuation is no longer cheap. Barclays values IBM near 21 times projected 2027 unlevered free cash flow, leaving little room for stumbles, though broad software optimism is helping the group.Four things IBM bulls want to see nextSoftware growth holding in the mid-single digits or better, quarter after quarter.Margins expanding as the revenue mix tilts further toward software.Fundable progress on the 2029 quantum roadmap and the Anderon foundry.No fresh AI threat to IBM’s consulting and mainframe base.For those who wish to open a stock position, own IBM for its software engine, and treat quantum computing as a free option that could lift the stock toward $449 if the technology delivers. Having quantum computing as your main reason for buying means you are betting on the best case, not the safer one.Related: CoreWeave CEO sends blunt message to Nvidia stock investors