Chairman, President and CEO of IBM Arvind Krishna attends the 55th annual World Economic Forum meeting in Davos, Switzerland, on Jan. 22, 2025.IBM reported better-than-expected fourth-quarter results on Wednesday and issued a forecast that slightly topped estimates. Here how the company did compared to LSEG consensus estimates:Earnings per share: $4.52 adjusted vs. $4.32 expectedRevenue: $19.69 billion vs. $19.23 billion expected.Revenue rose 12% during the period from $17.6 billion a year earlier. Net inco ...

"In the fourth quarter, we delivered strong revenue growth, with double-digit Software performance. Additionally, Infrastructure continued its double-digit revenue growth with the robust adoption of the next generation of our mainframe platform. Our generative AI book of business now stands at more than $12.5 billion. This capped a strong 2025 for IBM where we exceeded expectations for revenue, profit and free cash flow," said Arvind Krishna, IBM chairman, president and chief executive officer. "We enter 20 ...

Core Viewpoint - IBM is positioned as a strong player in the AI sector, with RBC Capital maintaining an Outperform rating and a price target of $350.00 ahead of its earnings report [1][3]. Group 1: Earnings Expectations - RBC anticipates solid results from IBM, expecting an increase in overall revenue and free cash flow [2]. - Investors are particularly focused on whether IBM can sustain its recent momentum as earnings are reported [2]. - The software revenue subcomponents will be closely monitored, with Red Hat facing pressure but expected to recover and contribute to growth by fiscal 2026 [2]. Group 2: Investment Perspective - RBC views IBM as a defensive AI investment, highlighting its exposure to hybrid cloud, AI, and long-term opportunities in quantum computing [3]. - The firm continues to favor IBM as a defensive play in the AI market, maintaining its Outperform rating and price target [3].

Core Viewpoint - IBM is positioned as a key player in the AI sector, with analysts expecting its fourth-quarter earnings to meet or slightly exceed consensus estimates, driven by momentum in its Infrastructure segment and improvements in Consulting [1][2]. Financial Performance - IBM is projected to report approximately $19.2 billion in revenue and earnings per share of $4.29 for the fourth quarter [3]. - The company's cost-saving initiatives are anticipated to enhance pre-tax income margins, potentially leading to earnings upside [3]. Cost-Saving Initiatives - IBM's efficiency initiatives are expected to yield an estimated $4.5 billion in gross run-rate savings by the end of 2025 [4]. - The company is likely to provide guidance for 2026 during the earnings report, with expectations of growth at the lower end of its mid-single-digit target range and at least one percentage point of pre-tax income margin expansion [4]. Key Areas of Interest - Investors will be focused on additional metrics such as AI bookings, revenue details, and the integration of Confluent [5]. - IBM is recognized as a pioneer in artificial intelligence, offering consulting services and a range of AI software products [5].

International Business Machines Corporation (NYSE:IBM) will release earnings results for its fourth quarter, after the closing bell on Wednesday, Jan. 28.Analysts expect the Armonk, New York-based company to report quarterly earnings at $4.29 per share, up from $3.92 per share in the year-ago period. The consensus estimate for IBM's quarterly revenue is $19.21 billion, versus $17.55 billion a year earlier, according to data from Benzinga Pro.On Dec. 8, IBM agreed to acquire Confluent, Inc. (NASDAQ:CFLT) for ...

IBM reports after the close Wednesday. Analysts expect software to drive results and provide support for the stock after a strong 12-month rally. ...

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Core Insights - The fourth quarter earnings season is gaining momentum, with major tech companies like Microsoft, Meta, Tesla, and Apple leading the earnings calendar [1] - A positive consensus is emerging, with 13% of S&P 500 companies having reported fourth quarter results, and analysts projecting an 8.2% increase in earnings per share, marking the potential for the 10th consecutive quarter of annual earnings growth for the index [2] - Analysts had initially expected an 8.3% increase in earnings per share, a decrease from the previous quarter's 13.6% growth rate, but have recently raised expectations, particularly for tech companies [3] Industry Trends - The earnings season will not only focus on Big Tech but will also assess the broader stock market breadth that has improved at the start of 2026, with ongoing themes such as artificial intelligence and economic policies from the Trump administration continuing to influence market dynamics [4] - In addition to the major tech earnings, updates will be provided from a diverse range of companies across various sectors, including UnitedHealth, Boeing, General Motors, IBM, Starbucks, and others, indicating a comprehensive earnings landscape [5]

Core Viewpoint - IBM is recognized as a significant player in the AI sector, with analysts highlighting its potential for growth and stability, particularly through software-led initiatives and margin expansion [1][2]. Group 1: Stock Performance and Valuation - Stifel analyst David Grossman has reiterated a Buy rating on IBM with a price target of $325.00, viewing it as a safe compounder benefiting from software-led growth and margin expansion [1]. - IBM is currently trading at a 40% premium to the equal-weight S&P 500 multiple, which aligns with its long-term average range of 20-55%, but is above the pre-2025 trend of around 10-20% [2]. Group 2: Growth Projections - Stifel anticipates organic software growth of approximately 7-8%, consistent with expected performance in 2025, with software acquisitions expected to provide additional growth tailwinds into 2027 [3]. - Services fundamentals, which account for about 32% of IBM's revenue, are seen as bottoming out and showing signs of modest improvement [3]. Group 3: Margin Expansion and Estimates - There is continued potential for margin expansion in 2026 and 2027, with Stifel maintaining its 2026 estimates, which are largely in line with consensus [4]. - The Confluent acquisition has not yet closed and is not reflected in estimates, but it is expected to be modestly dilutive to 2026/2027 EPS and free cash flow [5]. Group 4: Financial Estimates - The company is maintaining its 2026 estimates with revenue growth of 4%, constant currency margins increasing by 75 basis points, EPS growth of 8% to $12.23, and free cash flow growth of 7% to $15 billion [5]. - A stronger USD has reduced the 2026 foreign exchange tailwind from 90 basis points to 40 basis points [5].

Core Viewpoint - The enthusiasm surrounding artificial intelligence (AI) stocks may be outpacing their underlying business models, raising concerns about sustainability and future performance [1][2]. Group 1: AI Market Dynamics - Significant spending on AI firms is not self-sustaining, with many companies relying on venture capital rather than established business models [2]. - OpenAI plans to spend approximately $1.4 trillion on computing resources over the next five years while still facing losses, indicating a reliance on external funding [3]. - Structural challenges such as energy supply constraints, data center limitations, and community resistance could pose risks to AI stocks [3]. Group 2: Viability of AI Products - The majority of users (95%) utilize Large Language Models (LLMs) like ChatGPT for free, raising doubts about the ability to monetize these products effectively [4]. - Competitive pressures are increasing, with Chinese companies offering similar LLM capabilities for as low as $3 per month [5]. Group 3: Hedge Fund Interest - Hedge funds are focusing on AI stocks, as research indicates that mimicking top hedge fund stock picks can lead to market outperformance [6]. - The article highlights specific AI stocks that are popular among hedge funds, indicating a trend in investment strategies [5]. Group 4: Company-Specific Insights - **Bloom Energy Corporation (NYSE:BE)**: - The stock has 64 hedge fund holders, with Jefferies raising its price target to $92.00 while maintaining an Underperform rating due to high expectations and execution risks [8][10]. - Anticipated 2026 revenue is projected to reach $2.9 billion, 16% higher than consensus estimates, driven by AEP and Quanta orders [9]. - The company develops solid-oxide fuel cell systems for on-site power generation, catering to the energy demands of AI data centers [11]. - **International Business Machines Corporation (NYSE:IBM)**: - The stock has 66 hedge fund holders, with Evercore ISI reiterating an Underperform rating and a price target of $330.00 ahead of its earnings report [12]. - Expected revenue is around $19.2 billion with earnings per share of $4.29, supported by momentum in the Infrastructure segment and cost-saving initiatives [14][15]. - Investors are also interested in AI bookings and revenue details as part of IBM's ongoing AI consulting services and software offerings [16].