IBM Is America’s Worst Big Tech Stock

By Douglas A. McIntyre Updated Oct 25, 6:32AM EDT · Published Oct 24, 6:20AM EDT

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International Business Machines Corp. (NYSE: IBM | IBM Price Prediction) 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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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.