IBM (IBM) Tops $300 Billion Market Cap on Quantum Hype, But Analysts Say Software Is the Real Engine

IBM shares surged 7.6% to a record closing high of $320.42 on June 1, pushing its market capitalization past $300 billion for the first time, as quantum computing fervor and U.S. government backing fueled a rally. Yet Barclays initiated coverage with an Overweight rating and a $350 price target, arguing the company’s sticky software business, not quantum, is the true value driver. The quantum narrative intensified after the Commerce Department announced a $2 billion quantum industry plan in late May, with much of the funding directed to IBM, and the company pledged over $10 billion for quantum R&D and manufacturing over five years. President Trump also recently praised CEO Arvind Krishna, suggesting further share gains. However, Barclays analyst Raimo Lenschow highlighted that software accounts for nearly half of IBM’s revenue and most of its profits, serving large, highly regulated clients with high switching costs. Red Hat contributes about 12% of total revenue, and Melius Research sees potential for its growth to reaccelerate as enterprises deploy AI workloads on hybrid cloud platforms. While the “quantum train has left the station,” analysts say the software segment remains the overlooked catalyst.