24/7 Wall St. Insights
- International Business Machines Corp. (NYSE: IBM) was once America’s premier tech public corporation.
- Now it pales in comparison to Microsoft Corp. (NASDAQ: MSFT) and other mega tech leaders.
- Also: Discover the Next Nvidia.
International Business Machines Corp. (NYSE: IBM) is America’s worst big tech company. Or, maybe it is too small for that. After years of shrinking at the top line, followed by less than mediocre growth, it has a market cap of $182 billion. The Microsoft Corp. (NASDAQ: MSFT) market cap is $3.1 trillion. Microsoft will be one of the dominant players in the future of artificial intelligence (AI). It would be almost impossible to find anyone who understands tech companies to see the same in IBM’s future. Microsoft currently dominates the cloud sector, just behind Amazon.com Corp. (NASDAQ: AMZN). IBM is barely a player.
In IBM’s most recent quarter, it had revenue of $15.8 billion. Net income was $1.8 billion, a margin of 11%. Microsoft’s revenue was $64.7 billion for the same period, against a net income of $22 billion. That is a margin of 34%. IBM expects growth at single-digit percentages for 2024. Microsoft’s will be well into the double digits.
IBM’s business never got off the ground in cloud infrastructure market share. In the first quarter, the sector became the primary driver of revenue across the industry. Amazon’s market share, according to Statista, was 31% in the first quarter, followed by Microsoft at 25%. IBM’s was 2%.
In 1990, IBM was number four on the Fortune 500. Microsoft was not on the list of the top 100. Amazon was not founded until 1994. IBM missed the rise of PC operating systems, e-commerce, search, and smartphones, which were at the heart of the industry’s success. For all those failures, investors paid the price.
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