AI investment grows, benefiting IBM significantly

AI spending is on the rise, and IBM is seen as having significant growth potential. Daniel Ives from Wedbush Securities, known for his positive outlook on tech companies, believes that AI now comprises around 12% to 15% of IT budgets. This is an increase from his earlier estimate of 10% in January. Ives made these claims based on recent conversations with several large companies, despite the struggling stock market. The Nasdaq Composite index has dropped significantly in the last few weeks, leading to concerns about tech stock prices and their future potential. According to Ives, about 70% of companies he talked to have increased their AI budgets in the last six months. These companies are from various industries, including financial services and healthcare. He ranked Palantir and Salesforce as the top software plays for 2025 but included IBM in his Best Ideas List due to its cloud success. However, IBM's stock has seen a decline of 6.7% in recent weeks, although it rose by 1% in early trading on Monday. J.P. Morgan's Brian Essex remains cautious about IBM, maintaining a Neutral rating. He noted that IBM could face challenges from the federal government’s efforts to reduce spending, which only accounts for a small part of its revenue.