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With a market cap of $217.1 billion, Armonk, New York-based International Business Machines Corporation (IBM) is a global IT company addressing hybrid cloud and AI opportunities through a platform-centric approach, offering technology and business expertise to support clients' digital transformations. It provides integrated solutions such as hybrid cloud platforms, AI technology, and lifecycle services.
Companies worth over $200 billion are generally described as “mega-cap” stocks, and International Business Machines fits this criterion perfectly. IBM owns Red Hat, which is reported under the Software segment, and maintains strategic partnerships with leading companies like AWS, Microsoft, and SAP. It also delivers innovative solutions through a vast ecosystem of partners.
However, the technology and consulting company has dipped 1.1% from its 52-week high of $237.37, reached on Oct. 15. But, over the past three months, shares of IBM have rallied 15.9%, which slightly outpaced The Technology Select Sector SPDR Fund's (XLK) rise of 14.6% during the same period.
In the longer term, IBM has risen 43.5% on a YTD basis, outperforming XLK’s 24.6% gains. Moreover, shares of International Business Machines have gained 45.5% over the past 52 weeks, compared to XLK’s 30.1% gains over the same time frame.
Since last year, IBM stock has been trading above its 200-day moving average. It has also stayed above its 50-day moving average during this period, despite some fluctuations in between.
Despite adjusted earnings per share of $2.30 beating estimates on Oct. 23, IBM stock tumbled 6.2% the next day due to weaker-than-expected Q3 revenue of around $15 billion, as reduced discretionary enterprise spending impacted its consulting segment. Customers prioritized generative AI (GenAI) projects over traditional IT spending, leading to a slowdown in consulting signings and infrastructure revenue ahead of the FY/25 refresh cycle. While the software segment grew 9.7% to $6.5 billion, its strength was overshadowed by consulting and infrastructure headwinds. Analysts highlighted near-term IT budget constraints and expected continued pressure on consulting into early 2025, dampening investor sentiment.
Nevertheless, compared with its rival, Accenture plc (ACN) has lagged behind IBM, with a rise of 2.1% on a YTD basis and a 6.6% increase over the past 52 weeks.
Despite IBM’s outperformance relative to the broader sector over the past year, analysts are cautious about its prospects. The stock has a consensus rating of “Hold” from the 17 analysts covering the stock, and it is currently trading above the mean price target of $221.41.
