International Business Machines Corporation (NYSE:IBM) is included among the 12 Best Dogs of the Dow to Invest in. IBM and Pearson Team Up on AI-Powered Learning IBM and Pearson announced on December 11 that they are teaming up on a global partnership focused on AI-powered learning. The goal is to build more personalized learning tools for businesses, public-sector groups, and schools. These products are designed to help individuals acquire the right skills more quickly and transition smoothly between ro ...

Core Insights - IBM and Pearson have formed a global partnership to develop AI-powered personalized learning products for various sectors including businesses, public organizations, and educational institutions [1][3] - Research from Pearson indicates that inefficient career transitions and skills mismatches could result in a loss of $1.1 trillion in annual earnings for the US economy, highlighting the need for more effective learning solutions as AI transforms work and education [2] Group 1: Partnership Objectives - The partnership aims to create AI-powered learning tools utilizing IBM's watsonx Orchestrate and watsonx Governance, which will be available globally [3] - IBM will assist Pearson in developing a custom AI-powered learning platform that integrates human expertise with AI technologies, enhancing Pearson's operational efficiency and decision-making processes [3][4] Group 2: Benefits and Tools - IBM's customers and its 270,000 employees will gain access to Pearson's enterprise learning solutions, which include digital credentialing through Credly, strategic workforce planning via Faethm, and global delivery of IBM professional certification exams [4] - The collaboration will also focus on developing tools to verify the capabilities of AI agents, ensuring organizations can confidently deploy these technologies [5] Group 3: Strategic Vision - The partnership aligns with Pearson's strategy to foster strong relationships with select strategic partners to enhance customer outcomes and drive joint market initiatives [6] - Both CEOs emphasize the importance of adapting to the fast-evolving technological landscape, with a focus on embedding learning into the workflow to improve productivity and performance [6]

Core Insights - IBM has expanded its collaboration with Microsoft to enhance its consulting capabilities through the integration of Microsoft's Copilot with IBM Consulting Advantage, allowing consultants to utilize AI tools within Microsoft 365 applications [1][9] - The AI consulting services market is projected to grow at a compound annual growth rate of 26.2% from 2025 to 2035, positioning IBM to capitalize on this trend with its integrated offerings [4] - IBM's Consulting segment reported revenues of $5.32 billion in Q3, an increase from $5.15 billion year-over-year, driven by business application transformation and modernization [5][9] Company Developments - IBM's integration of AI tools has resulted in the equivalent of over 250,000 hours saved annually, translating to approximately $35 million in value, allowing consultants to focus on revenue-generating tasks [3][9] - The company is currently trading at a price/earnings ratio of 24.19, which is above the industry average of 23.39, indicating a relatively higher valuation [10] Competitive Landscape - IBM faces competition from Accenture and Infosys in the consulting sector, both of which are also expanding their AI capabilities and forming strategic collaborations to enhance their service offerings [6][7] - Accenture has recently partnered with Microsoft to launch a copilot business transformation practice, while Infosys is expanding its generative AI portfolio through collaborations with industry leaders [6][7]

Core Insights - IBM and Accenture are key players in digital transformation and consulting, focusing on technology and business processes powered by AI and cloud architecture [1][2][3] IBM's Position - IBM's Consulting business is experiencing growth in technology consulting, supply chain, and business application transformations, leveraging AI technologies and a broad partner ecosystem [4][5] - The IBM Consulting Advantage platform provides industry-specific AI assistants, enhancing the delivery of solutions and accelerating time to value [4] - IBM's collaboration with SAP aims to integrate generative AI in the retail sector, improving productivity and business transformation [5] - Despite these strengths, IBM faces challenges with a 10.5% year-over-year decrease in consulting signings due to macroeconomic uncertainty and competition from firms like Accenture [6] - IBM is addressing these challenges through innovation and acquisitions, including the purchase of Hakkoda Inc. to enhance its data consultancy capabilities [7] Accenture's Position - Accenture benefits from increased spending on application modernization, cloud enablement, and cybersecurity, driving demand for its managed services [8] - The company emphasizes building a robust digital core through cloud, data, and AI, and collaborates with major tech firms to enhance its competitive edge [9][10] - Accenture has seen steady customer growth, particularly in the finance sector, and is actively acquiring companies to enter high-growth areas [10] - However, integration risks from acquisitions and competition from IBM and others may impact organic growth [11] Financial Estimates and Performance - The Zacks Consensus Estimate for IBM's 2025 sales and EPS indicates year-over-year growth of 5.5% and 6%, respectively, with positive trends in EPS estimates [12] - For Accenture, the 2025 sales and EPS estimates imply growth of 5.41% and 6.11%, but the EPS estimate for 2026 has been trending downward [12] - Over the past year, IBM's stock has increased by 50.5%, while Accenture's has only gained 3.1% [14] - IBM's shares trade at a forward P/E ratio of 23.02, slightly lower than Accenture's 23.95 [15] Investment Outlook - Both companies hold a Zacks Rank 3 (Hold), but IBM's technology portfolio and recent performance suggest it may be a more attractive investment option at this time [16][17]

Core Insights - IBM has established a new Microsoft Practice within IBM Consulting to enhance business outcomes for clients undergoing AI, cloud, and security transformations [1][2] - The new practice integrates IBM's industry expertise with Microsoft's technology portfolio, including Copilot, Azure OpenAI, and Azure Cloud, to simplify digital transformation for businesses [2][4] Company Developments - The Microsoft Practice will leverage a team of over 33,000 Microsoft-certified professionals across various markets, aiming to deliver tailored solutions for clients [3] - This initiative is expected to foster innovation and operational excellence, helping businesses unlock new growth opportunities [5] Client Impact - The practice will focus on developing industry-specific solutions for sectors such as retail, government, and financial services, building on existing offerings like IBM Copilot Runway [5][6] - IBM has successfully completed over 14,000 Microsoft projects globally, demonstrating its capability in implementing Microsoft generative AI solutions [6] Technology Integration - The Microsoft Practice will incorporate Microsoft's technology ecosystem into IBM Consulting's AI-powered delivery platform, enhancing flexibility and governance for clients [4][7] - More than 30 IBM Software offerings are already running on Microsoft Azure, facilitating easy integration for automation and AI solutions [7]

Core Viewpoint - IBM is expected to report lower revenues in its Consulting segment due to macroeconomic uncertainties, but product innovation and deal wins may provide some support [1][6]. Factors at Play - IBM's Consulting segment offers strategy, technology, and intelligent operations services, leveraging hybrid cloud and AI technologies from IBM Software and strategic partners like AWS, Microsoft, Oracle, and SAP [2]. - The collaboration with Juniper Networks aims to enhance productivity in enterprise workflows by integrating IBM's watsonx platform with Juniper's Mist AI, improving IT network management and user experiences [3]. - IBM Consulting launched new AI Integration Services to transform end-to-end processes using agentic AI, focusing on building applications with persona-based user experiences and real-time data integration [4]. - The deployment of IBM's services by UAE's e& for a Generative AI governance solution highlights the increasing customer base and its potential positive impact on upcoming results [5]. Overall Expectations - The Zacks Consensus Estimate for revenues from the Consulting segment is $5.1 billion, while the model projects revenues of $5.17 billion [7]. - Total revenues for the March quarter are estimated at $14.45 billion, a slight decline from $14.46 billion in the prior-year quarter, with adjusted earnings per share expected to decrease from $1.68 to $1.42 [8]. Earnings Whispers - The model does not predict an earnings beat for IBM in the first quarter, with an Earnings ESP of -1.68% [9].

Core Insights - IBM has acquired Hakkoda Inc., a global data and AI consultancy, to enhance its consulting services and data transformation capabilities [1][2][4] - The acquisition aims to meet the increasing demand for data services and assist clients in building efficient enterprise data estates [2][3] - Hakkoda's expertise in generative AI and data modernization will complement IBM's existing consulting offerings, particularly in sectors like financial services and healthcare [3][4] Company Overview - Hakkoda is recognized for its capabilities in migrating, modernizing, and monetizing data estates and is an award-winning partner of Snowflake [2][5] - The company has received accolades such as the 2024 Snowflake Healthcare & Life Sciences Services Partner of the Year and the 2023 Snowflake Americas System Integrator Innovation Partner of the Year [5] - Hakkoda operates globally with a strong presence in the United States, Latin America, India, Europe, and the United Kingdom [6] Industry Context - The global spending on enterprise intelligence services is projected to grow from $169 billion to over $243 billion by 2028, with a five-year CAGR of approximately 13% [4] - Businesses are increasingly seeking modern data migration strategies and multi-use case data platforms in the cloud to extract value from their data [4]