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Strong software sales and demand for AI services offset consulting weakness and an infrastructure slump.
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On October 24, Morgan Stanley reiterated its ‘Equal-weight' rating on IBM but revised the price target downward to $208 from $217. This adjustment reflects concerns over the company's mixed third-quarter performance, where the revenue of $14.97 billion came in below their $15 billion estimate, primarily due to weak Consulting and Infrastructure segments.
Is IBM stock's hot streak in danger of fizzling out?
Shares of IBM IBM tanked in early trading on Thursday, after the company reported downbeat third-quarter revenues.
IBM beats estimates for earnings but lags the same for revenues.
IBM's Q3 '24 earnings report revealed weak growth, with only a 1.5% YoY increase, despite AI hype. The generative AI business shows promise but contributes minimally to the profit picture, with most bookings tied to low-margin consulting services. The stock is overvalued at 22x 2025 EPS targets, requiring unlikely 10%+ growth rates to justify current prices.
International Business Machines Corp (NYSE:IBM) shares were still down over 6% on Thursday afternoon after the computing company reported mixed earnings for the third quarter. Jefferies analysts highlighted the contrast between the strong growth in software and the lagging performance in other business areas in a note Thursday.
IBM reported its Q3 earnings with EPS beating expectations, while a soft revenue figure added some volatility to the stock. The company's software segment, continues to deliver strong growth, balancing weaker trends from its infrastructure and consulting segments. The stock offers good value within the tech sector and maintains a positive outlook.