Unisys vs. IBM: Which Tech Stock Has More Upside in 2H 2025?

In today’s dynamic tech landscape, investors are increasingly eyeing IT services stocks that strike a balance between innovation and stability. Unisys Corporation UIS and International Business Machines Corporation IBM both operate at the heart of this sector, offering enterprise solutions ranging from cloud infrastructure and cybersecurity to AI-powered services. While IBM commands global recognition as a legacy tech powerhouse with a diversified revenue base, Unisys represents a leaner, value-oriented contender undergoing a strategic transformation. As demand for digital modernization accelerates, the real question for investors is: which of these IT services stocks offers the better opportunity right now, IBM’s scale and consistency or Unisys’s turnaround potential?The Case for UISUnisys is fundamentally driven by its transformation strategy centered on expanding solution-based revenue streams, operational optimization and increased brand relevance in AI and cybersecurity. A major growth driver is its Device Subscription Services (DSS) and Digital Workplace Solutions (DWS), with recent signings including large-scale device management contracts across global clients. With the backlog in the DWS segment growing at a double-digit pace year over year and major DSS contracts set to roll out over the next several quarters, Unisys appears well-positioned to drive sequential growth in the back half of 2025. Management expects DSS-driven field services to play a key role in that rebound, especially as new enterprise storage work and AI-enabling infrastructure start to gain traction.Security is another key pillar. Unisys is expanding its portfolio with Post-Quantum Cryptography solutions, managed threat detection, and agentic AI to help clients navigate growing cyber risks. The company is also rolling out AI-enabled frameworks, like its Service Experience Accelerator, that automate IT operations and enhance productivity. With strong new business signings (TCV up 80% Y/Y) and a resilient backlog, Unisys is positioning itself for sequential revenue growth despite near-term discretionary spending softness. Operationally, it is improving margins through workforce optimization and SG&A cost control, aiming for $100 million in pre-pension free cash flow in 2025. Unisys’s fundamentals hinge on innovation, recurring contract wins, and niche strength in security, AI integration and infrastructure support.The Case for IBMIBM is strengthening its AI portfolio by integrating governance and security into a unified platform, marking a significant step toward safer and more responsible AI deployment. The company introduced the industry’s first integrated software that combines its trusted watsonx.governance framework with Guardium AI security, enabling enterprises to monitor and manage AI systems transparently while safeguarding AI agents and models. Enhancements to Guardium, co-developed with AllTrue.ai, now allow detection of emerging AI use cases across cloud environments and code repositories, ensuring robust protection of decentralized AI assets. Furthering its AI ambitions, IBM is also partnering with SAP to apply generative AI in retail and collaborating with the All England Lawn Tennis Club to boost fan engagement during Wimbledon, underscoring IBM’s commitment to real-world, responsible AI innovation.IBM’s core growth is being powered by its focused pivot toward hybrid cloud, AI, and recurring software revenues. The company’s software segment, which now makes up nearly 45% of its business, delivered 9% growth in first-quarter 2025, driven by strong demand for Red Hat (up 13%), automation, data, and AI-powered tools like watsonx. A key driver is IBM’s early leadership in generative AI, with a $6 billion book of business largely supported by its consulting arm.IBM is also seeing high-margin gains from its shift to subscription and platform-based services, boasting an 80% recurring revenue base in software. Operational discipline is another major factor, with productivity initiatives yielding over $3.5 billion in annualized savings, helping IBM expand margins and fund innovation. The company’s balance sheet remains robust with $17.6 billion in cash, supporting its aggressive investments, including the acquisition of HashiCorp to strengthen cloud security and automation. Overall, IBM’s fundamentals rest on the durability of its diversified portfolio, enterprise trust, innovation, and scale.How Does Zacks Consensus Estimate Compare for UIS & IBM?The Zacks Consensus Estimate for UIS’ EPS implies year-over-year increases of 28.9%. Earnings estimates for 2025 have witnessed upward revisions of 132% in the past 60 days. Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for IBM’s 2025 EPS implies year-over-year growth of 6%. Earnings estimates for 2025 have witnessed upward revisions of 0.4% in the past 60 days.Image Source: Zacks Investment ResearchPrice Performance & ValuationUIS stock has declined 27.2% in the year-to-date period against its industry’s growth of 28.1%. Conversely, IBM shares have surged 32.8% in the same time frame.Price PerformanceImage Source: Zacks Investment ResearchUIS is trading at a forward 12-month price-to-earnings ratio of 5X, below its median of 10.59X last year. IBM’s forward sales multiple sits at 25.85X, above its median of 21.47X over the same time frame.P/E (F12M)Image Source: Zacks Investment ResearchEnd NotesWhile IBM remains a formidable tech leader with strong AI, cloud, and software capabilities, Unisys appears better positioned for upside in the near term due to its transformation-driven momentum and strategic focus. The company is actively reshaping its business through innovation in AI and cybersecurity, expanding solution-based offerings, and driving operational improvements that are beginning to show results. Unisys’ emphasis on recurring revenues, new contract wins, and emerging technologies like post-quantum security and agentic AI provides a compelling turnaround narrative. Meanwhile, IBM’s strength lies in its stability and scale, but its upside may be more moderate, given its already elevated valuation and slower earnings revision trends. For investors seeking a value-oriented opportunity with potential for outsized gains, Unisys offers a more dynamic risk-reward profile at this stage of the cycle. UIS sports a Zacks Rank #1 (Strong Buy), whereas IBM carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report International Business Machines Corporation (IBM): Free Stock Analysis Report Unisys Corporation (UIS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks