Jim Cramer’s Exclusive List: 10 Stocks to Monitor Closely

8. International Business Machines Corp. (NYSE:IBM)

Number of Hedge Fund Investors: 54

Jim Cramer is impressed with International Business Machines Corp. (NYSE:IBM)’s recent progress. He highlights their work with Watson, a powerful artificial intelligence system, and praises CEO Arvind Krishna for successfully transforming International Business Machines Corp. (NYSE:IBM).

“International Business Machines Corp. (NYSE:IBM) is doing quite well. We’re playing around with Watson for ESPN, which is unbelievable. I’m getting more and more impressed. Arvind Krishna has reinvented the company. He’s doing a terrific job.”

The positive outlook for International Business Machines Corp. (NYSE:IBM) is supported by its strong performance in artificial intelligence (AI) and hybrid cloud solutions, as well as steady earnings growth. International Business Machines Corp. (NYSE:IBM) has become a leader in enterprise AI with its “Watsonx” platform, which has generated over $2 billion since its launch and is fueling significant growth in AI and hybrid cloud areas.

In Q2 2024, International Business Machines Corp. (NYSE:IBM) reported earnings of $2.43 per share, surpassing analyst expectations, and achieved $15.77 billion in revenue—up 1.9% year-over-year—driven by a 7.1% increase in software revenue. International Business Machines Corp. (NYSE:IBM)’s gross profit margins improved to 56.8%, showing its operational efficiency. Despite economic uncertainties, International Business Machines Corp. (NYSE:IBM)’s strong demand for cloud and AI solutions, especially in its consulting and software segments, underscores its resilience. Consulting revenues reached $5.18 billion in Q2, contributing to its strong performance.

Additionally, International Business Machines Corp. (NYSE:IBM)’s commitment to shareholder value through dividends and effective cash flow management makes it attractive to long-term investors. With expected modest earnings growth and a focus on high-margin, innovative sectors, International Business Machines Corp. (NYSE:IBM) is well-positioned for continued success.

Diamond Hill Capital Long-Short Fund stated the following regarding International Business Machines Corporation (NYSE:IBM) in its first quarter 2024 investor letter:

“Among our bottom Q1 contributors short positions in Dick’s Sporting Goods, International Business Machines Corporation (NYSE:IBM) and Palomar Holdings. Though we believe the quality and durability of IBM’s free cash flow-generating capabilities remain questionable, investor sentiment has improved amid optimism for the company’s still-nascent AI product suite.”