) reported their Q3 ’24 financial results, the night of October 23rd, ’24, the stock has had a nice run into the earnings release, trading above it’s previous, April 2013, all-time-high of $213 – $215 per share. Now with the pullback since the Q3 ’24 earnings update, the stock is still being bought in small quantities, as the stock is already oversold, now trading between the April, 2013, all-time-high of $213 – $215, but above the April – May, 2024 highs of $198 – $199.
What was encouraging on the call was that the AI “book” since inception now stands at $3 billion, up from $2 billion at the end of the 2nd quarter ’24, but that’s cumulative $3 billion book on an expected total revenue estimate for 2024 of $62 billion.While IBM’s forward estimate revisions are seeing mild downward pressure, it’s nothing like the drop in EPS estimates after earnings were released.
IBM’s price-to-revenue is a little over 3x, while price-to-cash-flow and price-to-free-cash-flow is much more reasonable at 13x and 14x the trailing-twelve-month numbers. The AI book is encouraging, but it’s still just 5% of revenue, and that’s since “inception” so investors would sure like to see IBM develop that further.
In terms of holding IBM in client accounts, part of the recent interest is that IBM is “old tech” and as the above Ychart shows, the stock has dramatically underperformed the SP 500, and thus if the mega-cap 7 or mega-cap 10 or large-cap growth or momentum, or whatever name you wish to assign to the SP 500’s leadership the last 10 years starts to fade, or even correct sharply, IBM remains “uncorrelated” to the tech momentum crowd. .
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