Investing.com -- Wedbush Research added IBM (NYSE:IBM) to its Best Ideas List, highlighting the company’s focus on balancing growth investments with improved operating efficiency.
The firm expects this approach to support a strong free cash flow trajectory, projecting it to outpace revenue growth by roughly 2 to 3 percentage points (ppts).
“With AI expected to drive $4.4 trillion in annual productivity gains by 2030, we believe that IBM is well-positioned to capitalize on the current demand shift for hybrid and AI applications as more enterprises look to implement AI to drive efficiencies across operations,” Wedbush said in a Monday note.
With this addition, IBM joins over a dozen other stocks on Wedbush’s Best Ideas List, including Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Cheesecake Factory (NASDAQ:CAKE), Roblox, Western Digital (NASDAQ:WDC), Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), and Wingstop (NASDAQ:WING).
Last month, IBM reported fourth-quarter profit that topped Wall Street expectations, fueled by strong performance in its software division as enterprise IT spending gained momentum.
The software unit posted its largest revenue increase in five years, with demand driven by growing interest in cloud infrastructure and generative AI technologies.
For guidance, the company said it expects at least 5% revenue growth in constant currency for 2025, accelerating from the 3% growth reported in 2024.
IBM’s AI-related business, which includes both bookings and sales across various offerings, reached over $5 billion since inception, up roughly $2 billion from the prior quarter.
The company’s AI business is largely driven by its consulting division, which makes up around 80% of the total, with software contributing the rest. However, consulting revenue declined about 2% to $5.2 billion in the quarter, while software sales rose over 10%.
Overall revenue came in at $17.55 billion, roughly flat year-over-year and in line with analyst expectations, based on LSEG data. Adjusted earnings per share for the quarter were $3.92, ahead of the $3.75 consensus forecast.