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International Business Machines Corporation (IBM), based in Armonk, New York, is a premier global provider of hybrid cloud, AI, and consulting services. With a market cap of $187.5 billion, IBM empowers businesses to extract insights from their data, optimize processes, lower costs, and achieve a competitive advantage in their industries.
Companies worth $10 billion or more are generally described as “large-cap stocks,” IBM fits right into that category, signifying its substantial size, stability, and dominance in the tech services industry. IBM is a pioneer in cloud technologies, offering a broad range of software services and innovations.
The company’s diversified business model spans software, consulting, infrastructure, and financing, ensuring stability across sectors. Strategic acquisitions of over 100 firms in areas like cloud and security have fueled growth, while its three-market structure strengthens its presence in Asia.
The technology giant touched its 52-week high of $205.95 in the last trading session before pulling back. Shares of IBM are up 21% over the past three months, outperforming the broader Dow Jones Industrial Average Index’s ($DOWI) 5% return over the same time frame.
In the long term, IBM shares have gained 36.8% over the past year, and in 2024, the stock is up 23.9%. By contrast, the DOWI is up 8.1% on a YTD basis and 17.7% over the past 52 weeks.
The stock has maintained its position above the 50-day moving average since late June and above the 200-day moving average for over a year despite some minor fluctuations, reinforcing the bullish trend.
IBM has outperformed the market this year due to its strategic focus on enterprise AI solutions and a strong balance sheet. The company addresses data privacy challenges with its WatsonX AI platform and Granite models, while IBM Consulting enhances offerings through role-based AI assistants for customization.
Collaboration with Meta Platforms, Inc. (META) has been fruitful, with IBM playing a key role in launching Meta's Llama 3.1 model. Partnerships with Amazon.com, Inc. (AMZN), Adobe Inc. (ADBE), and Microsoft Corporation (MSFT) further solidify IBM's leadership in AI.
On Aug. 29, IBM announced a collaboration with Intel Corporation (INTC) to deploy Intel Gaudi 3 AI accelerators as a service on IBM Cloud, expected to launch in early 2025. IBM Cloud will be the first to support Gaudi 3 in both hybrid and on-premise environments, addressing the growing demand for affordable AI computing solutions. The stock rose 1.6% in the following trading session.
In the dynamic tech services landscape, top rival Oracle Corporation (ORCL) has struggled to keep pace with IBM over the past year, posting a 15% rise. However, ORCL’s 35.3% return in 2024 surpasses IBM’s gains on a YTD basis.
Despite its recent outperformance, analysts remain cautious about IBM’s prospects. The stock has a consensus rating of “Hold” from the 15 analysts covering it, and the stock currently trades over its mean price target of $188.47.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
