IBM's (IBM) move to boost its quantum computing investment will likely take years before it starts yielding benefits, but the strategy is a "net positive" amid a rapidly evolving software landscape, Wedbush Securities said.
IBM will invest an additional $10 billion over the next five years to accelerate its quantum roadmap beyond delivering its fault-tolerant quantum computer in 2029, the computer and software firm said Tuesday.
The investment will fund research and development, capital expenditure, manufacturing scaling, ecosystem partnerships and strategic acquisitions, IBM said Tuesday in a blog.
"We believe this ($10 billion commitment) will take multiple years to gain traction as the company's aim of reaching the first fault-tolerant quantum computer by 2029 remains a long-term project, but we view this as a net positive as IBM looks to future-proof its business around the rapidly evolving software landscape," Wedbush analysts including Dan Ives wrote in a note.
Having deployed more than 90 systems worldwide, IBM operates the largest global fleet of quantum computers.
"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, and we believe IBM's positioning at the forefront of (artificial intelligence) and quantum remains under-appreciated," Ives said.
Wedbush raised its price target on IBM to $350 from $320 and maintained its outperform rating, highlighting confidence in the company's ability to continue driving profitable growth across new and existing business verticals.
The computer and software firm maintained its full-year revenue growth outlook in April and reported first-quarter results above Wall Street's estimates.
"IBM continues to see solid momentum across its portfolio of products for AI, hybrid cloud, automation, and cybersecurity with customers looking for trusted, scalable and compliant solutions that can be deployed across complex environments," Ives said. "IBM's ability to combine software, consulting, and infrastructure into one integrated stack remains an important advantage to the company's business flywheel as more organizations launch production-scale AI use cases."
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