IBM Common Stock (IBM)

Benefited from uptake in AI. Multiple's expanded to 18-19x forward PE, up from low double digits. Market's recognizing improved growth outlook. 

In that consulting space she'd prefer, and owns, GIB.A. Its valuation is much better.

Is up 15% this year. The CEO is doing a fine job. Trades at only 22x PE.

Purchase of Red Hat really put them in the cloud and data centre business, saved them. Over last couple of years, execution of business plan was perfect. But more recently, especially in Q2 earnings, execution faltered. He's been adding in the $240 area. 12-month price target of $314.

It has transformed into a hybrid cloud and AI company. Software does remain the engine. Has $7.5 billion in AI related business. Margins are quietly improving with strong cash flow. Yield is 2.7%. It is a real contender in the quantum race. She sees 18% upside potential and in the longer run of 12 months 27%.           Buy 8  Hold 10 Sell 2

It's not true that they are stodgy, old tech. They've gotten into AI with Watson, and done an alliance with Meta. What's holding them down in consulting, which is low-growth. He sold it recently. There are more predictable stocks like Meta and Amazon.

Their last quarter wasn't that bad, and now the shares are an opportunity. We will be talking about IBM and quantum computing. IBM has a great software package, too. Yes, the chart is bad, but the fundamentals are right.

Starting to get back into the really exciting parts of technology somewhat. Doesn't have the growth he's looking for, only 6-7% growth and paying 21x PE. In the tech space, you really want to see 10-20% earnings growth. Trendlines have been decent, but now down to 200-day MA (could be a buying opportunity, but not for him).

Competition is the challenge. MSFT has become the darling. If you don't have an AI piece, you're left behind. Consider switching out, and take a look at MSFT or even AAPL (now that tariffs are getting resolved).

He expects a boring report next with fantastic numbers, including EPS. The Red Hat integration is working.

Has owned it in the past. When he held this at $180, the market was ignoring IBM's AI business and saw low growth. So, he bought it. IBM teamed up with Meta to enhance their Watson franchise. He made good money. Then, he started to see the PE rising into the 20s, and Accenture and other peers reported weak results. So, he exited and wouldn't re-enter.

She bought it when it was trading at 12x PE and yielded over 5%. Diversifying away from mainframe computers to cloud and AI will raise growth in the future. 

Is a quantum computing play, Watson AI is a tailwind and Red Hat is monetizing as well as leading in AI.

Is up 71% since he added it a year ago. Has become more fully valued at 25x PE. Still a great business with modest revenue growth and margin expansion. They benefit from the transition from a consulting business to an software, AI-led. They are emerging as a leading quantum computing play.

This is the next phase. We've been in this AI growth patch for a while now, which won't end, but quantum is the next level. It answers a lot of the problems that we deal with in the world such as medical issues and cybersecurity.

Problem is, not a lot of developed companies in the space. The industry is quite immature, but sometimes (if you have a longer time horizon) that's where you find opportunities for decent, long-term growth. Unlike AI, quantum needs a lot of space (perhaps it could solve office realty issues). IBM is starting to look more prominent in that space.

Good part is that it's part of quantitative computing, and this is where the stock can rally in the next 5-10 years. Doesn't feel it can put enough money in to become one of the leaders in that area. That's why he owns MSFT.