IBM stock surged on Monday after Barclays initiated coverage with a bullish outlook for the storied tech giant.

The stock jumped 10%, extending gains from last week. Barclays analysts’ bull case doesn’t rest on IBM’s quantum computing potential, but instead a recently unloved area of the tech software.

“Our core thesis is that IBM has created a stable growth engine around its very defensible software portfolio. This creates solid future growth but also better margins,” the analysts wrote, adding, “Quantum represents a very interesting option value with IBM being an early leader.”

The note marked Barclay’s initiation of coverage with an overweight rating and a $350 price target, a roughly 11% upside from where the stock opened Monday’s session.

IBM’s recent stock rally erases SaaSpocalypse losses

IBM’s gain on Monday adds to the double digit rally last week. Shares surged nearly 13% on the final trading day of May. A regulatory filing from the company showed IBM plans to invest $10 billion into quantum computing in the next five years. The news helped to spur more bullishness following an investment from the Trump administration as part of a push to bolster US quantum capabilities.

The recent rally has helped erase 2026 losses, pushing the stock up 10% year to date. IBM was hit hard by the “SaaSpocalypse,” which tanked many software stock on fears that AI would disrupt the industry.

Barclays pushed back on that narrative, with analysts saying they view IBM’s software exposure as a positive, not a negative.

“While software has a negative investor connotation at the moment, IBM is offering infrastructure software (the good part) to large, often heavily regulated customers, which creates a very sticky set-up that should not see negative AI implications,” the analysts wrote.

“We see mid single digit organic revenue growth and ongoing margin leverage, which should create a stable earnings compounder with a Quantum option – a good combination and hence our Overweight rating,” they added.

The firm compared IBM’s quantum potential to Nvidia’s GPU dominance.

“Quantum computing has the potential to become the next major compute paradigm, following the CPU and GPU eras,” the note read.

Trump’s 2025 IBM shout out makes the rounds

Another factor contributing to investor interest in IBM is a 2025 video of US President Trump recirculating on social media.

Trump praised IBM CEO Arvind Krishn as “a legend” in a White House business roundtable at the end of last year.

“He’s taken the stock from a rather low price to a very nice price. I won’t say high because I’m sure you’re going to say it’s going to go up a lot more, right?,” the president said on December 20, 2025 to IBM’s CEO.

A clip recirculated on X and Reddit, with user posts saying Trump said the stock is “going to go up a lot more.”

Trump investment account has bought IBM shares in recent months, according to recent legal filings.

IBM’s recent gains fit into a wider theme of older computing stocks seeing a new uptick in the AI era.