Core Viewpoint - Kyndryl Holdings, Inc is experiencing positive momentum following its transformation from IBM, with a Buy rating initiated by Guggenheim analyst Jonathan Lee, who has set a price target of $30 [1][2]. Group 1: Company Strategy and Performance - Kyndryl has implemented a "Triple A" framework focusing on Alliances, Advanced Delivery, and Accounts, which has improved contract-signing quality and operational automation [2][3]. - The company is transitioning from legacy IBM-related deals to partnerships with hyperscalers and technology vendors, enhancing its offerings in consulting, cloud-enabled managed services, cybersecurity, and data and AI solutions [3][4]. - Kyndryl aims to triple cash flow, double pretax earnings, and achieve single-digit revenue growth by 2028, with early results showing adjusted EBITDA margins increasing from 12% in 2022 to 16.7% in 2025 [4]. Group 2: Market Position and Growth Potential - Despite revenue pressures from traditional data centers, growth in cloud-based services is anticipated to offset declines, positioning Kyndryl favorably in the expanding IT infrastructure services market, projected to grow from $900 billion to $1.2 trillion by 2029 [5]. - Kyndryl's focus on contract economics has led to the exit or repricing of lower-quality engagements, thereby strengthening its portfolio and expanding margins [4][5]. Group 3: Financial Projections - Analyst Jonathan Lee projects third-quarter revenue of $3.93 billion and adjusted EPS of $0.85 for Kyndryl [6].

Market Overview - The Dow Jones Industrial Average rose by 315.72 points or 0.6657% to 47742.84 during a shortened Black Friday trading session, driven by optimism for a potential Federal Reserve interest rate cut in December and stronger-than-expected economic data [1] - Despite a temporary technical outage at CME Group that halted futures trading, the overall market sentiment remained positive [1] Sector Performance - Financial institutions and technology firms led the gains in the Dow, with notable performances from JPMorgan Chase (up 1.91% to $313.58), Salesforce (up 1.79% to $232.12), and Goldman Sachs (up 1.66% to $829.545) [2] - Other significant gainers included Amazon (up 1.55% to $232.77) and IBM (up 1.42% to $307.623) [2] Decliners - Nvidia was among the biggest losers, down 1.81% to $176.9551, followed by Johnson & Johnson (down 1.36% to $204.7473) and Amgen (down 0.62% to $342.53) [3] - Additional stocks in negative territory included Apple (down 0.39% to $276.53) and Merck (down 0.27% to $104.47) [3]

Core Insights - IBM's Software segment has experienced healthy profit growth driven by product innovation and increased adoption of hybrid cloud services [1][7] - The rise in cloud-native workloads and generative AI has led to complex infrastructure strategies, boosting demand for IBM's hybrid cloud services [2] - Recent acquisitions, including HashiCorp, StreamSets, and webMethods, have enhanced IBM's capabilities in managing multi-cloud environments and data integration [3][7] IBM's Software Segment Performance - The Software segment encompasses Hybrid Cloud, Automation, Data, and Transaction Processing businesses, which have collectively improved IBM's ability to optimize IT spending and enhance efficiency [1] - The hybrid cloud services are witnessing strong adoption among clients, contributing to sustainable growth through advanced technology and consulting expertise [2] Competitive Landscape - Amazon Web Services (AWS) remains a leader in the cloud-computing market, offering a wide variety of databases and services that cater to diverse business needs [4] - Microsoft Azure has expanded its global presence, enhancing its competitive position in the cloud market with a robust network of data centers [5] Financial Performance and Valuation - IBM's stock has increased by 33.4% over the past year, while the industry has grown by 60.2% [6][7] - The company trades at a forward price-to-sales ratio of 4.05, which is below the industry average of 4.39 [8] - The Zacks Consensus Estimate for IBM's earnings for 2025 has seen upward revisions over the past 60 days, indicating positive sentiment [9][10]

We've heard so much about the GPU Chip's A. I. needs, which have catapulted in video to the top of the leaderboard.But what about quantum computing. How are they different. And who's making them.Jerry Chow of IBM gave us a tour at the Thomas J. Watson Center in Yorktown, New York. So this is our IBM Quantum System two, which is the most recent one. Most recent one.It is also a infrastructure that is built with modularity and scalability in mind built for data centers. Right. So the way to think about it is ...

Core Insights - The article discusses the advancements in quantum computing technology, particularly focusing on IBM's latest quantum systems and their infrastructure designed for scalability and modularity [1][2][5]. Group 1: Quantum Computing Infrastructure - IBM's Quantum System Two is highlighted as the most recent quantum computing system, featuring a modular architecture built for data centers [1][2]. - The cryogenic system is essential for cooling the quantum processors, which currently include three Heron processors with 156 qubits each [3][4]. - The control electronics are located close to the quantum processors to minimize latency and ensure efficient signal manipulation [4][5]. Group 2: Quantum Chip Technology - The Nighthawk quantum chip, which has 120 qubits arranged in a square lattice, offers improved connectivity compared to previous generations [6][14]. - The chips are mounted on printed circuit boards and integrated into cryogenic infrastructure, allowing for a varying number of chips to be accommodated [7][8]. - Efforts are being made to miniaturize wiring and components to enable more chips to fit within the same cryogenic footprint [9][12]. Group 3: Testing and Characterization - IBM has a dedicated lab for testing and characterizing quantum chips, where both room temperature and cryogenic tests are conducted to ensure performance before deployment [17][18]. - The testing environment replicates the conditions under which the chips will operate, achieving temperatures as low as 15 milli Kelvin [19][20].

Core Insights - Concerns about AI replacing human workers have escalated, with a recent MIT study indicating that AI can replace 11.7% of the US labor market [1] Company Actions - **HP**: Plans to cut 4,000 to 6,000 jobs by the end of 2028, aiming to save around $1 billion through AI initiatives and workforce reductions [6][7] - **IBM**: Has replaced hundreds of HR employees with AI and plans to cut thousands of workers by Q4 2025, while also shifting focus to hire more in AI and quantum roles [10][11][12] - **Amazon**: Announced 14,000 job cuts, with CEO stating the layoffs were not primarily driven by AI but rather cultural reasons [15][16] - **Salesforce**: Reduced customer support headcount from 9,000 to 5,000 due to AI agents, while successfully redeploying hundreds of employees to other areas [20][21] - **Klarna**: CEO indicated the company could operate with half its current staff, with AI handling the workload equivalent to 853 full-time agents, saving an estimated $58 million annually [25][26] - **Fiverr**: Slashed approximately 30% of its workforce, affecting about 250 employees, to become a leaner "AI-first company" [31][32] Industry Trends - A World Economic Forum survey found that 41% of companies globally expect to reduce their workforces over the next five years due to AI, while tech jobs in big data, fintech, and AI are projected to double by 2030 [3]

Market Outlook - Modest market strength is expected for the remainder of 2025, but caution is advised for 2026 regarding portfolio risk [1] - ETFs are pointing towards fractional gains at the opening bell [1] Investment Strategy - Focus on quality stocks, particularly those in consumer staples, healthcare, and select industrials, as lower quality companies have outperformed this year [2] - Companies with increasing dividends over the long run are considered a good investment [4] - Quality companies are defined as growing, profitable, and well-capitalized with reasonable multiples [3] Stock Recommendation - IBM is suggested as a potentially cheaper alternative to data center companies with a rising dividend and strong balance sheet [5] - IBM's server side of the business is expected to grow at 6% to 7%, with accelerating software growth and expanding margins [6]

Core Insights - The article emphasizes the importance of understanding macro trends and their influence on asset prices and investor behavior, particularly in the context of equity analysis and research [1]. Group 1: Professional Background - The author has over 10 years of experience in asset management, focusing on equity analysis, macroeconomics, and risk-managed portfolio construction [1]. - The professional background includes advising on and implementing multi-asset strategies, with a strong emphasis on equities and derivatives [1]. Group 2: Investment Philosophy - The goal of sharing insights is to make investing accessible, inspiring, and empowering for all investors [1]. - The author encourages building confidence in long-term investing through shared knowledge and collaboration among investors [1].

Core Insights - IBM is recognized as a legacy tech company with significant segments including software, consulting, and infrastructure [1] Group 1: Company Overview - IBM Z is highlighted as one of the top choices in its category, indicating its strong market position [1] Group 2: Investment Strategy - The focus is on growth stocks, particularly those integrating AI into their operations and possessing a competitive advantage in their sector [1] - The investment strategy emphasizes identifying stocks with high growth potential that are undervalued in the market, aiming to build a portfolio centered on growth rather than fear of missing out (FOMO) [1]

Core Insights - IBM's valuation is significantly lower compared to large tech companies, which reassures analysts [1] - The investment rationale for IBM is not based on valuation expansion but rather on providing a dividend-paying, defensive buffer while analysts focus on SaaS and large tech stocks [1] - Analysts have noted that IBM has delivered actual performance to support its AI business commitments, showing strong execution in AI, hybrid cloud, and IBM Z infrastructure [1] Financial Performance - The core software business growth remains in double digits but is slightly below the fourth quarter of 2024 [3] - Red Hat's business continues to grow, but the growth rate has slowed from 16%-17% to approximately 14% [4] - Consulting business revenue has stabilized, shifting from a year-over-year decline of 2% to a growth of 2% [5] - Infrastructure support business revenue is flat or slightly up, contributing stability to total revenue and EBITDA, but without significant acceleration in trends [6] - The transaction processing business has seen a substantial decline, dropping from approximately 10% year-over-year growth to -2% [6] - Automation business has made significant progress, with growth accelerating from about 15% to approximately 24% [6] - Data and AI business growth has also increased moderately from 4%-5% in Q4 2024 to 8% currently [6] - The hybrid infrastructure business has rebounded significantly, with IBM Z business reversing from a 20% year-over-year decline to a 61% growth in Q3 2025 [6][8] Market Sentiment - The rebound in IBM Z business reflects the end of a large mainframe upgrade cycle, indicating that such high growth rates may not be sustainable [8] - The consulting business has stabilized due to specific client project wins and digital transformation spending, but performance may fluctuate with macroeconomic changes [8] - The narratives around automation and AI are seen as structural growth trends, reflecting ongoing digital transformation and early AI adoption, although their absolute contribution to overall software revenue remains limited [8] - AI business orders increased from $5 billion in Q4 2024 to $9.5 billion in Q3 2025, but the growth rate has slowed compared to previous quarters [8] Valuation and Outlook - Since April, IBM's valuation (measured by enterprise value to forward EBITDA ratio) has increased by 20%-25%, from approximately 14.5x to 17.5x [10] - The 21% year-over-year EBITDA growth in Q3 2025 is notable compared to 7%-8% in Q3 2024, indicating a positive trend [9] - However, the improvement in EBITDA may largely stem from non-structural factors, such as the IBM Z mainframe cycle, rather than sustained acceleration in core business [13] - The overall revenue growth guidance for 2025 exceeds 5%, suggesting a slowdown in growth compared to earlier quarters [9] - IBM's current investment logic remains consistent with April's assessment, indicating reasonable valuation and potential for AI business uplift, but the best-case scenario for EBITDA improvement seems to be priced in [15]