International Business Machines Corporation IBM will release earnings results for its third quarter, after the closing bell on Wednesday.
IBM's recent stock surge is likely driven by AI hype, but its fundamental growth and valuation don't justify the high price. The company's dividend yield and growth rate are unimpressive, and buybacks are insufficient to offset stock-based compensation. IBM's free cash flow has gone nowhere over the years, but the stock's valuation has become elevated.
The tech giant's quick, cost-efficient AI models can be fine-tuned with enterprise data to produce impressive results.
With a 70% rally over the past 12 months, IBM stock is trading at record levels ahead of an important Q3 report Wednesday.
IBM is likely to have recorded higher revenues from the Software segment on product innovation and the growing clout of watsonx.ai.
IBM is likely to have recorded higher revenues from the Consulting segment backed by rising demand for technology consulting and business transformation services.
When IBM reports their Q3 2024 earnings Wednesday, consensus expectations will be looking for $2.23 in EPS on $2.6 billion in operating income, and $15 billion in revenue. Perhaps something the Street is warming up to is IBM's improved free cash flow. For Q4 '24 (typically IBM's strongest quarter of the year), the sell-side consensus is expecting $3.76 in EPS, $4.3 billion in operating income, and $17.9 billion in revenue.
IBM released the latest version of its artificial intelligence models catered towards businesses on Monday, looking to capitalize on the surge in enterprises adopting generative AI technology.
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This cloud-computing leader may have more room to run.
Beyond analysts' top -and-bottom-line estimates for IBM (IBM), evaluate projections for some of its key metrics to gain a better insight into how the business might have performed for the quarter ended September 2024.
IBM is poised to benefit from strong demand for hybrid cloud and AI, driving growth in the Software and Consulting segments.