Yahoo Finance Will Modest Top-Line Improvement Buoy IBM Earnings in Q1?
International Business Machines Corporation IBM is scheduled to report first-quarter 2024 results on Apr 24, after the closing bell. In the last reported quarter, the integrated systems provider beat the Zacks Consensus Estimate by 9 cents.
The New York-based company is expected to have recorded a top-line expansion year over year, backed by growing demand for its AI-powered solution suite across industries. Management’s policy to expand its portfolio with a strong focus on innovations and strategic buyouts is a tailwind.
Factors at Play
During the first quarter, IBM introduced LinuxONE 4 Express, an advanced data center solution designed to provide cybersecurity, scalability and AI inferencing for hybrid cloud environments. The solution’s cutting-edge features make it suitable for a multitude of use cases for startups and small and medium-sized enterprises.
With built-in hardware-based security technology and confidential computing capabilities, the solution effectively shields sensitive data and digital assets. It enhances protection against both external threats and insider breaches by enabling scalable isolation for individual workloads.
In the first quarter, IBM integrated the open-source Mixtral-8x7B large language model into its watsonx AI and data platform. The optimized version of Mixtral-8x7B, developed by Mistral AI, showcases impressive performance gains. Internal tests reveal a remarkable 50% increase in throughput compared to the standard model. By leveraging quantization techniques to reduce the model size and memory requirements, IBM anticipates significant reductions in latency, potentially ranging from 35% to 75%, depending on batch size. These are likely to have driven the top-line growth in the Software segment.
During the quarter, IBM collaborated with SAP to tap generative AI technology within the retail industry. The collaboration is likely to facilitate higher productivity and help accelerate business transformation in consumer-packaged goods and retail firms. Leveraging indigenous IBM technologies such as IBM Garage methodology, the company aims to help business enterprises undergo rapid digital transformation by embracing generative AI.
IBM is further likely to help the clients complement SAP solutions with IBM watsonx. The collaboration will help wholesale distributors and retailers improve product distribution by feeding external data such as weather, traffic and local events into the SAP Direct Distribution solution and apply AI to identify optimal store delivery routes to reduce costs.
IBM also collaborated with Riyadh Air to enhance travel experiences, harnessing the power of IBM Consulting's expertise in AI, technology and operations. The state-of-the-art project aims to leverage cutting-edge digital technologies to incorporate easy-to-deploy and easy-to-access AI-powered systems and expand the scope of in-flight. These are likely to have generated incremental revenues in the Consulting segment.
The Zacks Consensus Estimate for total revenues for the company stands at $14,525 million. It generated revenues of $14,252 million in the prior-year quarter. The consensus mark for earnings is currently pegged at $1.60 per share, indicating growth from $1.36 in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for IBM for the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.86%, with the former pegged at $1.58 and the latter at $1.59. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
International Business Machines Corporation Price and EPS Surprise
International Business Machines Corporation price-eps-surprise | International Business Machines Corporation Quote
Zacks Rank: IBM has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Qualcomm Incorporated QCOM is set to release quarterly numbers on May 1. It has an Earnings ESP of +6.15% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Silicon Motion Technology Corporation SIMO is +5.96% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on May 2.
The Earnings ESP for Meta Platforms, Inc. META is +0.62% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Apr 24.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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