By Mackenzie Tatananni

What do International Business Machines and Adobe have in common? Not much, according to analysts at Jefferies, who dubbed IBM an "acceleration story" while moving to the sidelines on shares of design-software maker Adobe.

Analysts upgraded IBM shares to Buy from Hold and boosted their price target to $360 from $300 in a note Sunday, writing that they expect the storied tech giant to see growth in software in the coming year. However, the firm didn't write as favorably on Adobe, whose artificial-intelligence push largely has failed to pan out. Analysts downgraded Adobe to Hold from Buy and slashed their price target to $400 from $500 as they identified a "lack of catalysts" in the coming year.

IBM rose 1.2% to $295.06 in premarket trading. Adobe fell 0.7% to $331.

"While we remain confident that value will ultimately accrue to the software layer, investors may need to stay patient," Jefferies cautioned. "With sector valuation back at historical average, there's ample room for multiple expansion once AI monetization begins to lift growth."

Within software, the firm prefers the makers of underlying infrastructure, such as operating systems and servers, rather than the makers of applications, which explains their preference for IBM over Adobe. However, the "universally negative application sentiment is not grounded in realities," analysts wrote, adding that they expect sentiment to improve in the second half of 2026.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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January 05, 2026 07:37 ET (12:37 GMT)

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