IBM Common Stock (IBM-N)

Bought on promise of its AI partnerships. Moved up steadily, but he worried that legacy businesses were lagging. He sold when valuations got into low 20s. Have to know when to buy, and when to sell.

It just reported great numbers and shares jumped 13%. Redhat has made this an AI winner. It rallied 34% last year. They've had 6 straight quarters of positive sales growth, leading to an earnings beat and excellent free cash flow. Their full year forecast includes accelerating revenue growth and free cash flow. YOY growth: infrastructure -8%, consulting -2%, software 10% which is the largest segment, amounting to 43% of 2024 revenues. Software got stronger as 2024 wore on, and this segment could make up 50% of IBM's business. Specifically, Red Hat grew 16% YOY in Q4 and automation 15%. Watson X and Red Hat are key growers, enjoying the AI tailwind. Their GenAI business generates over $5 billion of business, growing by $2 billion, quarter-over-quarter. That said, shares went sideways last October given a miss in their consulting business, but the CEO feels AI will return this segment to growth in 2026. Tailwinds: a good backlog, record signing in Q4, and business in GenAI all support accelerating growth in low-single digits. Caveat: their PE is 24x PE and 22x in 2026, instead of around 10x, but their return to steady growth justifies the PE and software will generate more recurring revenue. An indirect AI play that won't be hurt by DeepSeek.

There are better tech stocks, like MSFT and Google. It's been restructuring for many, many years. They've acquired some prudent companies, but also carry many legacy assets that are obsolete in the current world.

He owns MSFT, and it's also involved in quantum computing. Other names to think about are GOOG, AMZN, and Toshiba from Japan.

If you double your money, do the smart thing and sell half. These tech stocks are 3x riskier than the market if interest rates go up. It's about managing risk in your portfolio. 

It's still inexpensive, still has upside at 22x PE.

Lots of horses, but he hesitates because it's sitting around $230 with a price target of $257. Runway is a bit shorter. Add here and around $220, and certainly around $210.

Decent. She prefers names with better growth profiles. Spun off mainframe business, which improves growth profile. Now just consulting. Stock's done well, now getting into cybersecurity and AI.

They report next week. The CEO pulled it off through M&A and now we're seeing growth.

They report next week. A pleasant surprise, up 42% this year. They pulled it off with Red Hat and now with AI. 

Yes, he likes this strategy, because it puts less capital at risk. Buying such an option is deep in the money, and you can put the rest of the money in cash to earn income, for example.

Boring, but now things are coming together. Left a lot of baggage behind with the spinoff, but kept Watson, a leader in AI applications in healthcare. Lot of horses that they haven't yet raced. 12-month price target of $257. Yield is 3%.

Great time to buy with weak share price valuation. Moving into A.I. tech which has a lot of potential. Company turning the corner on outlook. Very strong future, and is a hidden gem. Not much downside on valuation, with a lot of upside. 

They are executing well, the valuation is not stretched and they continue to pay a dividend.

The unwind of one factor end tends to be positive on the other. So momentum unwinds into value.