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International Business Machines Corp. (NYSE:IBM) is one of the 10 Resilient Stocks Beating Market Slump.

International Business Machines saw its share prices climb by 5.04 percent on Tuesday to close at $264.94 apiece, after JPMorgan turned bullish for its stock, thanks to the rosy prospects for its software business.

In a market note, JPMorgan upgraded International Business Machines Corp. (NYSE:IBM) to "overweight" from neutral previously, while raising its price target by 7.8 percent to $291 from $270.

The coverage reflected its optimism for a strong demand for software services amid the accelerating adoption of artificial intelligence.

It said that software services will become central to International Business Machines Corp. (NYSE:IBM), with growth further seen in the second half of the year. It expects the segment to bring in predictable high-margin subscription revenue and better cash flow, contributing to a better financial profile than what its traditional hardware and consulting segments have to offer.

At present, software services make up 45 percent of International Business Machines Corp.'s (NYSE:IBM) revenues.

The company "has spent the better part of a decade repositioning itself from a hardware and services business into a software-led platform anchored by hybrid cloud and AI," JPMorgan said.

"However, we believe that investing in high-growth software now will actually reduce that need later. Over time, it will shift IBM toward recurring subscription revenue, permanently improving the company's financial health," it said.

While we acknowledge the potential of IBM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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