Did Trump spark an IBM stock rally? It's complicated.

By Hannah Pedone

IBM's strong stock momentum Monday comes as the software sector continues its comeback

IBM shares were staging a strong rally on Monday.

Stocks praised by President Donald Trump have been strong performers recently. Is International Business Machines another example?

The answer is likely complicated. IBM shares (IBM) jumped 7.6% on Monday, a move that some attributed at least partly to positive comments from Trump. The president's remarks, though, are from the end of last year.

A months-old video of Trump touting IBM CEO Arvind Krishna resurfaced online over the weekend, Jefferies analyst Jeffrey Favuzza pointed out. In the video clip of the December meeting, Trump praised Krishna for taking IBM to a "new stratosphere" and the stock to a "very nice price."

Why a video from six months ago would excite investors now isn't quite clear, although the Trump administration recently reaffirmed its backing of IBM - agreeing in May to provide a $1 billion grant to help the company create a quantum fab.

Trump's comments could be one factor behind the rally, Morningstar analyst Luke Yang told MarketWatch, although he noted that the consensus seemed to be that other, more generalized factors were helping drive IBM shares higher on Monday, namely broad software-sector strength.

See also: IBM could be a big winner as quantum computing moves out of the science-fiction realm

While investors "see positive signs with the overall software market, IBM's stock reaction is more apparent than that of other firms," he said.

Yang said that following weakness in the software sector earlier this year - a period colloquially known as the "Saascopalypse" - enterprise software companies like Workday (WDAY) and Salesforce (CRM) were still posting "robust results," while IBM's software segment had been disappointing investors.

"There was real sign of software weakness in IBM" that has justified the market's lower expectations for the stock, he said. And now, as investor concerns ease on software, IBM's stock is rebounding. He said it's a case of positive news flow leading to outsize stock moves given what's been a low bar for IBM.

On Monday, the iShares Expanded Tech-Software Sector ETF IGV, a proxy for software stocks, gained nearly 6%. Over a three-session stretch, the exchange-traded fund is up 15.8%, for its best three-day winning streak since 2001, according to Dow Jones Market Data.

On Monday, Barclays analyst Raimo Lenschow initiated coverage of IBM, saying that the company's software stack is highly defensible against artificial-intelligence fears. That's because large enterprises depend on a range of products in IBM's "layered" software portfolio - from its foundational operating systems to the data tools that run on top of it, he explained.

He also said the company has the potential to be an "early leader" in the quantum sphere.

Read more: The surge in chip stocks this year is putting the dot-com rally to shame

-Hannah Pedone

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06-01-26 1634ET