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Riding on a strong demand for hybrid cloud and AI (artificial intelligence) products, International Business Machines Corporation IBM has surged 31.7% over the past year against the industry’s decline of 17.2%, outperforming peers like Microsoft Corporation MSFT and Amazon.com, Inc. AMZN. Despite the rising adoption of enterprise capabilities of Azure OpenAI and Amazon Web Services, both Microsoft and Amazon are lagging behind IBM in terms of price performance. While Microsoft declined 10.9% over the same period, Amazon gained a paltry 5.3%.
One-Year IBM Stock Price Performance
IBM is poised to benefit from healthy demand trends for hybrid cloud and AI, which drive the Software and Consulting segments. The company’s growth is expected to be aided by analytics, cloud computing and security in the long haul. A combination of a better business mix, improving operating leverage through productivity gains and increased investment in growth opportunities will likely boost profitability.
IBM recently extended its collaboration with NVIDIA Corporation NVDA to scale AI workloads and agentic AI applications. Per the latest agreement, IBM aims to launch a content-aware storage (CAS) capability for its hybrid cloud infrastructure offering (dubbed IBM Fusion) and expand its watsonx integrations with NVIDIA while introducing new IBM Consulting capabilities.
The companies will collaborate to provide hybrid AI solutions to business enterprises that capitalize on open technologies and platforms, supporting data management, performance, security and governance. The CAS capability will enable firms to extract the hidden meaning of unstructured data for inferencing to scale and enhance AI applications without compromising on security. The integration of watsonx with NVIDIA Inference Microservices will offer greater accessibility to firms to leading AI models across multiple cloud environments.
Together, the companies will help clients transform and govern end-to-end business processes with agentic AI and monetize AI for real business outcomes. In addition, the collaboration with NVIDIA will help manage compute-intensive AI workloads across an optimized network fabric to overcome operational silos with an intelligent, scalable system that drives near real-time inference for responsive AI reasoning.
IBM has extended its partnership with Juniper Networks, Inc. JNPR to drive productivity in core enterprise workflows. Per the renewed agreement, IBM aims to integrate its watsonx platform with Juniper’s Mist AI to address the complexities of managing IT networks and help improve user experiences and lower operational costs.
In particular, IBM and Juniper will work in unison on two internal IBM projects, namely IBM Guest Services and IBM AskNetwork. IBM Guest Services intends to help automate IT network support services and minimize manual intervention to resolve guest Wi-Fi network issues. IBM AskNetwork will help resolve network infrastructure problems and diagnose end-user issues by simplifying complex technical data into consumable, actionable insights.
In addition to providing personalized support to each user in real-time, the extended tie-up will free up IT resources and empower end users with instant, accurate resolutions. This is likely to improve efficiency and help unlock new opportunities to stay ahead in the competitive business landscape. Such collaborations have helped IBM to witness an uptrend in revenues over the past few quarters.
IBM’s watsonx platform is likely to be the core technology platform for its AI capabilities. watsonx delivers the value of foundational models to the enterprise, enabling them to be more productive. This enterprise-ready AI and data platform comprises three products to help organizations accelerate and scale AI: the watsonx.ai studio for new foundation models, generative AI and machine learning, the watsonx.data fit-for-purpose data store built on an open lake house architecture and the watsonx.governance toolkit to help enable AI workflows to be built with responsibility and transparency.
IBM is currently witnessing an uptrend in estimate revisions. Earnings estimates for 2025 have jumped 2% to $10.79 over the past year, while the same for 2026 has increased 5.5% to $11.61. The positive estimate revision portrays bullish sentiments about the stock’s growth potential.
With solid fundamentals and healthy revenue-generating potential driven by robust demand trends, IBM appears to be a solid investment proposition. Further, a strong emphasis on hybrid cloud, diligent execution of operational plans and AI focus are driving more value for customers.
The stock delivered a trailing four-quarter average earnings surprise of 6.1% on average. IBM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Courtesy of a robust earnings surprise history and favorable Zacks Rank, it appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock.
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This article originally published on Zacks Investment Research (zacks.com).
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