** IBM IBM.N beat Wall Street estimates for fourth-quarter results on Wednesday, as the rapid adoption of AI boosted demand for its software services

** Shares of co rise nearly 8% to $317.71 premarket

SLOW DRIP, STRONG BREW

** J.P. Morgan ("neutral", PT: $317) says IBM’s data outperformance was described as seasonal, driven by ELA, with growth expected to return to lower levels next year

** However, co remains a relatively defensive name, with increasingly favorable exposure to software and AI tailwinds, JPM adds

** Morgan Stanley ("equal-weight", PT: $304) says IBM’s strong quarter was partly supported by increased customer financing, while near‑term hardware faces some risks

** Adds its latest enterprise mainframe, z17, is still expected to be one of the strongest mainframe cycles in decades

** RBC Capital Markets ("outperform", PT: $361) says Red Hat, IBM’s open‑source software unit, saw its growth slow during the quarter due to softer demand for its subscription‑based services and a tougher federal‑sector environment, but it is still expected to grow low-double-digits in FY/26

** Morningstar (fair value: $325) expects a stronger secular tailwind for IBM’s software business as enterprises expand their AI infrastructure footprint, supporting its 9% software growth forecast over the next five years

(Reporting by Akriti Shah in Bengaluru)

((akriti.shah@thomsonreuters.com))