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IBM has been outperforming Big Tech – but will that streak continue?

RESEARCH TRIANGLE PARK – IBM (NYSE: IBM) reports quarterly and annual earnings after today’s market close. The firm outperformed many other tech companies, which saw share prices drop severely in 2022 as macroeconomic conditions shifted and investors took a more cautious approach to technology stocks. Will the streak continue?

BM recorded a stock price high in mid-December, WRAL TechWire previously reported, with one Wall Street analyst pointing out that the company was buoyed by its prior acquisition of Raleigh-based Red Hat.

“More than 4,000 clients are utilizing Red Hat and IBM’s hybrid cloud platform. We remain bullish regarding improving the utility of hybrid cloud services based on the architecture built by IBM and Red Hat, by notable clients, including American Express, Bharti Airtel, Vodafone, Banco Sabadell, Broadridge Financial Solutions and Caixa Bank. Red Hat’s expanding foothold across the Asia Pacific is also anticipated to bolster IBM’s TAM (total addressable market),” wrote Zacks Research in December 2022.

The spinoff of Kyndryl in 2021 may also have contributed to IBM’s better-than-index performance in 2022, as the company itself reported in October during its third quarter earnings call.

IBM’s stock shines while rest of Big Tech suffers – here’s why, says top Wall Street firm

Analyst expectations

Still, IBM is expected to report after the market closes on Wednesday that the firm’s revenue has slipped by 2%, according to Visible Alpha, which compiled analysts’ estimates, as reported by Investopedia.

But a new estimate from Zacks Research notes that the company is expected to improve its earnings per share.

“The consensus mark for earnings is currently pegged at $3.60 per share, indicating an improvement from $3.35 in the year-earlier quarter,” Zacks Research noted on Tuesday.

Gary Cohn, IBM’s vice chairman, said that the company, led by CEO Arvind Krishna, will continue to execute Krishna’s plan for revenue growth and free-cash-flow growth, according to a report from Yahoo Finance Live published on Monday.

And Lisa Ellis, an analyst at SVB MoffettNathanson, told Yahoo Finance Live on Monday that between the company’s divestment of Kyndryl and the Red Hat acquisition “made IBM much more technology agnostic.”

Such a move, said Ellis, “helped to trigger the growth now in the company. They’re more consistently growing revenues up in the, you know, low to mid single digits.”