02:02 PM EDT, 10/16/2025 (MT Newswires) -- IBM ( IBM )' (IBM) software and consulting businesses look well positioned amid increasing demand for hybrid cloud and digital transformation, even as the stock looks overvalued, Synovus Trust said in a note emailed Thursday.

The technology giant is scheduled to release its third-quarter results next Wednesday. Analysts polled by FactSet are looking for non-GAAP earnings of $2.44 per share on revenue of $16.09 billion, up from the prior year quarter's $2.30 and $14.97 billion, respectively.

In July, the company affirmed its full-year topline guidance, expecting constant currency revenue growth of at least 5%. Analysts are currently projecting $66.77 billion in sales for 2025, up from the prior year's $62.75 billion.

"Recent acquisitions of Software AG and HashiCorp, combined with a mainframe/(Enterprise License Agreement) cycle, will lead growth to reaccelerate in 2025 and 2026," Synovus Senior Portfolio Manager Daniel Morgan said. "IBM's ( IBM ) software and consulting businesses (are) well positioned for hybrid cloud and digital transformation growth ahead."

However, Morgan said the stock now trades near all-time highs, with the 5% revenue growth already priced in. "IBM ( IBM ) shares appear overvalued trading at a significant premium to the average 5-year multiple," he said.

Investors have bet big on artificial intelligence names, driving tech valuations higher, with some participants warning that the AI spending boom may be a bubble.

Still, the stock could receive a boost amid excitement surrounding quantum computing, he said. IBM ( IBM ) plans to unveil its quantum computers by 2030, according to the Synovus report.

In April, IBM ( IBM ) said it was looking to invest $150 billion in the US over the next five years, including to support its manufacturing of mainframe and quantum computers.

"The Quantum era is closer than some may think," Morgan said. "IBM ( IBM ) is in the pole position as leading institutions like Amazon ( AMZN ) , Microsoft ( MSFT ) and (Alphabet's) Google ( GOOG ) , as well as startups like Rigetti, race to release the first quantum computer."

Quantum computing is projected to grow into a $1.3 trillion market by 2035, according to Morgan.

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