IBM's (IBM) Q4 topline beat was driven by infrastructure upside, improving transaction processing and solid data growth, BofA Securities said in a Wednesday research note.

The company delivered a 100 basis-point pre-tax income margin expansion despite a $300 million workforce rebalancing charge in Q4. Productivity improvements are a major driver of profit expansion, given the dilution from Confluent (CFLT), the analysts said.

BofA said it expects hybrid cloud to record double-digit growth in 2026 while forecasting low-single-digit declines in infrastructure this year due to tougher comps for the z17 full-stack AI offering, according to the note.

Consulting revenue could grow low- to mid-single digits in 2026 on AI demand and lower backlog erosion. For 2026, BofA expects EPS of $12.20 on revenue of $71 billion.

BofA reiterated its buy rating on the stock and raised its price target to $340 per share from $335.

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