We recently published a list of 10 Mid-Cap IT Stocks Outperforming The Market In 2025. In this article, we are going to take a look at where International Business Machines Corporation (NYSE:IBM) stands against other mid-cap IT stocks outperforming the market in 2025.
US Stocks continue their recovery from a post-DeepSeek and post-tariffs period as nerves surrounding Donald Trump’s unpredictable policies calm down. The Nasdaq is surging 1.19% followed by the S&P 500 at 0.64%. The bullishness is expected to continue for the remainder of the day.
To determine which stocks could outperform the market in the coming months, it is essential to look at sectors that are benefitting from ongoing trends. IT stocks are unique in a way that with time, all companies have to spend more to keep their systems updated. Analysts expect companies to add 5% to their IT budgets in 2025. This, together with the increasing demand for AI products, will propel the sector’s returns in 2025.
Some companies have already started the year on a positive note. There are companies that are seeing increasing demand for their innovative products while others continue to serve the infrastructure involved in deploying these innovative solutions. Either way, it is important to look at what’s driving these stocks.
We decided to take a look at the top 10 mid-cap IT stocks that are outperforming the market in 2025. To come up with our list, we only considered stocks with a market cap of at least $10 billion with the highest return since the start of the year.
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International Business Machines Corporation (NYSE:IBM)
International Business Machines Corporation is an integrated services and solutions provider. It operates through four segments; infrastructure, software, financing, and consulting. The company has established strategic partnerships with various organizations including Microsoft, Samsung Electronics & SAP, Amazon Web Series, and others. The stock is experiencing an upward momentum with a 14% gain this year due to the strong growth reported in Q4 earnings.
The tech giant reported total AI products and services bookings exceeding $5 billion which grew substantially from the $3 billion reported in the last quarter. According to the management, 20% of the total AI bookings were from the company’s software business. Another key point is a 13.7% increase in cash flows that can be utilized for share buybacks and marketing to stay ahead of the competition.
Based on the last quarter’s performance, management is optimistic about the future outlook of the company. It raised its growth targets for 2025 and now expects revenue growth of about 5% while cashflows are predicted to be $13.5 billion. This growth is further supported by analysts’ optimism as most of them maintained their rating and raised the target price assigned to the stock. Stifel raised the target price from $271 to $290. RBC Capital Markets also raised its price target from $250 to $276 while Morgan Stanley kept its Equal Weight rating but increased the price target of the share from $217 to $228. Moreover, Evercore also maintained its Outperform rating but raised the target price from $240 to $275.
The CEO of the company, James Kavanaugh had this to say about future guidance:
Our 2025 guidance reflects the next evolution of our model, There is $13.5B in free cash flow and 5% revenue growth. 2025 is just the beginning of our model.
Overall, IBM ranks 6th on our list of mid-cap IT stocks outperforming the market in 2025. While we acknowledge the potential of IBM as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as IBM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
