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 $214 billion. The Microsoft Corp. (NASDAQ: MSFT) market cap is $3.2 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 the just-announced quarter, IBM had revenue of $14.97 billion, compared to consensus expectations of $15.07 billion. Revenue growth was only 1% from the same quarter a year ago. IBM lost $0.36 a share, compared with a profit of $1.84 in the year-ago period.
Arvind Krishna, IBM’s chairperson, president, and chief executive officer, said, “Our generative AI book of business now stands at more than $3 billion, up more than $1 billion quarter to quarter.” That figure is modest compared to the big tech companies. Microsoft’s earnings will show how large the chasm is.
One of IBM’s businesses did well. Software revenue rose 9.7% to $6.5 billion. However, consulting revenue was down 0.5% to $5.2 billion, and infrastructure revenue dropped 7.0% to $3.0 billion.
Over the past five years, IBM’s shares have risen 80%. The S&P 500 is up 92%, and Microsoft’s shares are 202% higher. That says it all.
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