<body><div>Buoyed by strong demand for hybrid cloud and AI, International Business Machines Corporation (IBM - Free Report) has surged 35.3% over the past year compared with the industry’s growth of 24.1%, outperforming peers like Amazon.com, Inc. (AMZN - Free Report) and Microsoft Corporation (MSFT - Free Report) .IBM is poised to benefit from healthy demand trends for hybrid cloud and AI, which are driving the Software and Consulting segments. The company’s growth is expected to be aided by analytics, cloud computing and security in the long haul. A combination of a better business mix, improving operating leverage through productivity gains and increased investment in growth opportunities will likely boost profitability.One-Year Price Performance<figure><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=3zM452_0vQ7pu8z00" alt="https://img.particlenews.com/image.php?url=3zM452_0vQ7pu8z00" width="620" height="319" ><figcaption>Image Source: Zacks Investment Research</figcaption></figure>IBM Focusing on Cloud, AI SolutionsIBM recently inked a partnership with Intel Corporation (INTC - Free Report) to deploy the latter’s Gaudi 3 AI accelerators as a service in IBM Cloud. With this, IBM became the first cloud service provider to deploy Gaudi 3 across both hybrid and on-premise environments.Aimed to offer improved visibility and control over the software stack, simplifying workload and application management, the collaboration intends to help customers cost-effectively scale enterprise artificial intelligence (AI) workloads while prioritizing performance, security and resiliency. The offering, slated to be available by early 2025, is likely to pave the path for more innovations in Generative AI to help unlock its full potential.IBM’s Watsonx Platform Gaining TractionIn March, IBM took a giant step forward in enterprise AI innovation by integrating the open-source Mixtral-8x7B large language model into its watsonx AI and data platform. Built on innovative Sparse modeling and the Mixture-of-Experts technique, this model excels in rapid data processing and contextual analysis. Its ability to efficiently handle vast datasets makes it a valuable asset for businesses seeking actionable insights. IBM’s Watsonx platform is likely to be the core technology platform for its AI capabilities. Watsonx delivers the value of foundational models to the enterprise, enabling them to be more productive. This enterprise-ready AI and data platform comprises three products to help organizations accelerate and scale AI — the watsonx.ai studio for new foundation models, generative AI and machine learning; the watsonx.data fit-for-purpose data store, built on an open lake house architecture; and the watsonx.governance toolkit to help enable AI workflows to be built with responsibility and transparency.IBM Profitability Dented by Margin PressureDespite solid hybrid cloud and AI traction, IBM is facing stiff competition from Amazon Web Services and Microsoft Azure. Increasing pricing pressure is eroding margins, and profitability has trended down over the years, barring occasional spikes. The company’s ongoing, heavily time-consuming business model transition to the cloud is a challenging task. Weakness in its traditional business and foreign exchange volatility remain significant concerns.<figure><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=3oK0U5_0vQ7pu8z00" alt="https://img.particlenews.com/image.php?url=3oK0U5_0vQ7pu8z00" width="620" height="236" ><figcaption>Image Source: Zacks Investment Research</figcaption></figure>Key Valuation Metric of IBMFrom a valuation standpoint, IBM appears to be trading at a premium relative to the industry and is trading well above its mean. Going by the price/earnings ratio, the company shares currently trade at 19.33 forward earnings, higher than 18.43 for the industry and the stock’s mean of 12.75.End NoteIBM aims to benefit from the increasing propensity of business enterprises to undertake a cloud-agnostic and interoperable approach to secure multi-cloud management with a diligent focus on hybrid cloud and generative AI solutions. With a surge in traditional cloud-native workloads and associated applications, along with a rise in generative AI deployment, there is a radical expansion in the number of cloud workloads that enterprises are currently managing. This has resulted in heterogeneous, dynamic and complex infrastructure strategies, which has led to a healthy demand trend.However, with a Zacks Rank #3 (Hold), IBM appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. It is also trading at premium valuation metrics and investors could wait for a better entry point to cash in on its long-term fundamentals. Consequently, it might not be a prudent investment decision to bet on the stock at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.</div></body>

Mountain View, CA

NewsBreak

IBM Gains 35% in the Past Year: Reason to Buy the Stock?

IBM - Free Report) has surged 35.3% over the past year compared with the industry’s growth of 24.1%, outperforming peers like Amazon.com, Inc. (. IBM is poised to benefit from healthy demand trends for hybrid cloud and AI, which are driving the Software and Consulting segments. The company’s growth is expected to be aided by analytics, cloud computing and security in the long haul. A combination of a better business mix, improving operating leverage through productivity gains and increased investment in growth opportunities will likely boost profitability.

IBM Gains 35% in the Past Year: Reason to Buy the Stock?

Comments / 0