IBM Shares Poised for Breakout as Legal Clouds Clear

International Business Machines (IBM) has long been viewed by the market as a slow-moving technology dinosaur, but a significant transformation occurring behind the scenes is now drawing enthusiastic responses from analysts. A combination of the sudden resolution of a protracted legal dispute and an aggressive new price target suggests a major shift occurred on Thursday. Is the market beginning a substantial re-evaluation of this IT behemoth?

Coinciding with the legal resolution, market experts are sounding a bullish call. Analysts at Oppenheimer have reaffirmed their "Outperform" rating and established a confident price target of $360 per share. The foundation for this optimism is fundamental: the Street is significantly underestimating IBM's successful pivot to a "software-first" enterprise. The driving forces behind this shift are identified as the integration of HashiCorp and a rapidly expanding artificial intelligence portfolio. With software revenue constituting an ever-increasing portion of the business mix, experts anticipate a notable expansion in valuation multiples. The market is only just starting to comprehend the sustainability of these new revenue streams.

A Major Legal Hurdle Is Removed

A longstanding legal overhang has been eliminated. On Wednesday, the corporation, together with the plaintiffs, submitted a settlement in the case of Knight v. IBM Corp. The lawsuit, heard in a New York district court, involved allegations that IBM had inaccurately calculated pension benefits using outdated mortality data. While the specific financial terms of the agreement remain confidential, the signal sent to the market is decisive: this legal uncertainty has been permanently resolved. The case is being dismissed without the option of reopening, which clears the path for management to focus entirely on operational performance.

Should investors sell immediately? Or is it worth buying IBM?

A Solid Foundation for 2026 is in Place

Third-quarter results provide concrete evidence that this strategic direction is already yielding results. IBM surpassed expectations with revenue of $16.33 billion, with the software unit particularly shining by posting organic growth of 9%. This core business is further complemented by strategic future bets, such as the recently announced quantum computing partnership with Cisco.

This renewed confidence is also reflected in the technical chart picture. The stock, closing at 262.55 euros, is within striking distance of its 52-week high and has already advanced more than 22% year-to-date. With legal risks now mitigated and cash flows expected to be bolstered by synergies, investors are looking ahead with anticipation to updates in December. Should IBM provide further details on its AI monetization strategy, the path for the forecasted rally could be fully cleared.