IBM Common Stock (IBM)

A few eyars ago they bought Red Hat, the basis of their cloud and AI business, which is now making some noise. IBM has partnered with Meta in AI. It trades below 20x, reasonable. Good opportunity through organic growth. Likes it.

Transitioning to more services. Has done all right. Trades at 16x. Has to prove it can grow double-digit earnings on a sustainable basis before it gets recognition from market, and this is harder for such a large company. Higher rates are impacting customers' budgets, seeing softness.

Legacy tech. Good, likes it. But in that area, other names are better constructed to take advantage of what we expect to happen over the next couple of years in AI integration in data centres and the like. Great company, but not always the best stock. See his Top Picks.

Really good restructuring into higher-margin services. Can't seem to get out of its own way. Growth trajectory and margins are not compelling. Pretty sure dividend is safe. Not sure lots of upside, given current valuation.

It is at a cheaper valuation and they are re-shaping themselves as a smaller company. You are not paying a big premium and he may consider buying it back.

They started to rest on their laurels when they got too big and lost their edge on AI. Their revenue is finally starting to go up. It compliments other tech areas and companies like NVIDIA and he owns it for the other side of AI.

Getting pricey, with a price target of $194.25, only a couple of dollars away. Keep your eye on it. Try to get it in the $180s, and $170s would be a great place to pick it up.

It has languished for many years compared to others in the same field. It has run up recently due to the AI frenzy/opportunity but there has been no big improvement in revenue and earnings. The largest component by far is consultation.

Legacy name that's trying to adapt. Now much more about services and subscriptions. Getting into AI through Watson, which long ago beat a world-class chess player and won a bunch of money on Jeopardy! Partnered with META and OpenAI. 18x earnings, not expensive. Good yield of 3.37%.

Sold some AVGO to buy this recently. It trades at under 3x sales. Free cash flow has grown in the last 6 quarters from $7 billion to $12 billion, which he loves. Wants to see the 3% dividend grow. They get AI exposure through Red hat and Watson X. Shares have done nothing for 3-5 years, but the last quarter was excellent. It's old-school tech, but more conservative than AI stocks and is dividend-focused. It's not the old IBM. Very optimistic.

Pretty fairly priced, price target is $194.25. One of the first on the AI bandwagon with Watson. Pretty significant play in the cloud, especially with Red Hat acquisition. Spun off hardware, now a software company. Decent runway.

Price target raised, though it's below the current share price. As we move into cloud, big data and AI, the big winners are in data like IBM. IBM is old and sleepy, but they bought Red Hat and will be a winner in this space, though not flashy but rather slow and steady. Pays a nearly 4% as you wait.

Open architecture through Red Hat, highly appealing. Long shot, but a possibility, that it'll be able to develop an open architecture to make it competitive in AI. If yes, it's going much higher. Getting act together, getting rid of legacy divisions. Don't go wild, but he wouldn't argue strenuously against adding it as part of a well-balanced portfolio.

He's uncertain about the industry that NXST is in, but confident about IBM who delivered an excellent quarter.

First on the AI stage with "Watson", but fell short because of so many businesses. Much more a pure company now, that's why it's doing well and will be able to grow over next several years. Will benefit from cloud, but behind the leaders. He likes MSFT better, but IBM is cheaper.