International Business Machines (IBM) looks "well-positioned" to capitalize on the industry-wide shift to investment in artificial intelligence due to its AI and hybrid cloud strategy, Wedbush said in a Wednesday note.

The company has seen a $3.5 billion reduction in its annual expenses over the past several years due to increased productivity, in part from the use of AI in its workflows, analysts led by Daniel Ives wrote.

"This increase in productivity has led to 5 points of margin expansion opportunity which the company has reinvested into R&D," the analysts said.

Moving forward, IBM's product strategy will revolve around AI and hybrid cloud, Wedbush said, adding that the company is currently in talks with Meta Platforms (META) for its watsonx.AI to become an API provider within Meta's Llama LLM stack.

Wedbush maintained its outperform rating and its $300 price target on IBM shares.

Price: 249.58, Change: +0.46, Percent Change: +0.18