In a research note this morning, Jefferies analyst James Kisner cut his price target for IBM (IBM) saying that while the company may offer one of the more mature cognitive computing platforms today, the "hefty services" component of many Artificial Intelligence deployments will be a hindrance to adoption.

TOUGH FIGHT IN AI: Jefferies' Kisner lowered his price target for IBM to $125 from $135, while reiterating an Underperform rating on the shares. The analyst told investors that his channel checks indicate IBM's Watson platform remains one of the most complete cognitive platforms available in the marketplace today, but the "hefty services" component of many AI deployments will be a hindrance to adoption. Additionally, Kisner pointed out that he believes that "Big Blue" appears outgunned in the war for AI talent and will likely see increasing competition. Amazon (AMZN), for example, has more than 10 times the job listings of IBM, he noted, adding that enterprises now have many choices for APIs from various providers.

KEY BENEFICIARIES: Jefferies' Kisner also argued that he believes Nvidia (NVDA) is the biggest beneficiary of ramping AI adoption, with his checks pointed to it as owning the market GPU-based computing for AI applications. As other beneficiaries, the analyst listed Pure Storage (PSTG), with its FlashBlade offering, and Mellanox (MLNX), which can also benefit from increasing demand on interconnect for AI applications. Competitive concerns, however, keep him from being more constructive on the latter, he noted.

PRICE ACTION: In afternoon trading, shares of IBM have gained about 0.55% to $154.02.