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IBM's New Chip Technology Represents 'Major Moment' For Semiconductor Industry, Wedbush Says

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IBM's New Chip Technology Represents 'Major Moment' For Semiconductor Industry, Wedbush Says

IBM's (IBM) technology capable of producing chips smaller than one nanometer represents a "major moment" for the semiconductor industry amid increasing artificial intelligence workloads, Wedbush Securities said in a note on Friday.

The company announced the new chip Thursday, featuring nearly 100 billion transistors on a chip the size of a fingernail. The new chip is projected to improve performance by 50% compared with the 2-nanometer chips, according to IBM.

The new technology marks "a major moment for the chip industry given the physical limits of traditional chip scaling while handling increasing AI workloads," Wedbush analysts, including Dan Ives, wrote. "IBM remains at the forefront of innovation to provide new ways to improve the handling of AI workloads for its customers and power the future of computing."

IBM has several partnerships within the semiconductor ecosystem, including with ASML (ASML) for ultra-precise circuit printing.

The computer and software firm's new chip architecture is expected to extend the company's semiconductor roadmap to at least the next decade and position it to be "a winner in the AI hardware market over the coming years," according Ives.

IBM disclosed plans to build a quantum foundry, Anderon, to boost manufacturing of quantum wafers in the US. IBM said it sees a path to production in as early as the next five years.

"IBM's quantum strategy is to maintain its position as a leader in providing quantum computing infrastructure by delivering the runtime environment for quantum capabilities," Ives said. "We believe IBM's positioning at the forefront of AI and quantum remains underappreciated."

Wedbush maintained its outperform rating on IBM's stock with a price target of $350.

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