12 Best Cloud Computing Stocks to Buy According to Analysts

10) International Business Machines Corporation (NYSE:IBM)

Number of Hedge Fund Holders: 56

Average Upside Potential: 10.1%

International Business Machines Corporation (NYSE:IBM) continues to focus on its strengths in artificial intelligence (AI) and hybrid cloud services to place itself for future growth. The company’s hybrid cloud solutions help enterprises combine public and private cloud resources, enabling seamless data and application portability. With more and more enterprises seeking to implement AI solutions, International Business Machines Corporation (NYSE:IBM)’s expertise in managing and optimizing Large Language Models both on-premises and in the cloud should result in strong revenue growth.

International Business Machines Corporation (NYSE:IBM)’s recent acquisition of HashiCorp demonstrates a significant move to enhance its cloud capabilities. The integration of HashiCorp’s Terraform product is expected to enhance OpenShift adoption and result in market share gains. This acquisition aligns with International Business Machines Corporation (NYSE:IBM)’s strategy of strengthening its position in the hybrid cloud market and offering comprehensive solutions to its enterprise customers.

HashiCorp’s offerings, combined with IBM and Red Hat, are expected to provide clients a platform for the automation of deployment and orchestration of workloads across evolving infrastructure including hyperscale cloud service providers, private clouds, and on-prem environments. This should enhance International Business Machines Corporation (NYSE:IBM)’s ability to address the total cloud opportunity, which according to IDC had a TAM of $1.1 trillion in 2023, with a CAGR in high teens through 2027. International Business Machines Corporation (NYSE:IBM) expects the transaction to be accretive to Adjusted EBITDA in the first full year, post-close, and FCF in year two.