IBM Stock Surges 6% After Beating Q2 Earnings Estimates – Is IBM Stock a Buy?
IBM stock soared 6% on Thursday following a strong Q2 earnings report, driven by its gen AI capabilities. The tech giant exceeded revenue expectations, with a 2% increase year-over-year to $15.8 billion. Net income also rose by 14% to $1.8 billion.
The company’s software business saw a 7.1% revenue growth, while consulting revenue slightly declined by 1%. IBM’s AI platform, watsonx, has been a significant driver of earnings, with a book of business surpassing $2 billion in just one year.
IBM’s free cash flow rose to $2.6 billion in the quarter, up from $2.1 billion a year ago. The firm also raised its operating margin and gross profit margin. Additionally, IBM raised its outlook for free cash flow to $12 billion for the year.
Despite the positive results, analysts have modest growth expectations for IBM stock. However, with a P/E ratio of 20 and a forward P/E of 18, IBM remains a relatively cheap option. The company’s focus on AI training and strong free cash flow make it an attractive investment for both short-term and long-term investors.
In conclusion, IBM’s recent performance and future outlook indicate that it is a solid investment choice, especially for those seeking a reliable dividend stock with growth potential. Keep an eye on IBM as it continues to leverage its gen AI capabilities and maintain its strong financial position in the market.