The stock is also dirt-cheap, at a forward price-to-earnings (P/E) ratio of just 11 versus nearly 28 for the technology sector. 'The more favorable business mix resulting from nurturing growth markets and spinning off Kyndryl is expected to drive strong free cash flow generation, even on a substantially lower revenue base,' says Argus Research analyst Jim Kelleher, who rates shares at Buy. IBM reported more than 3,500 hybrid-cloud customers in October, up from 3,200 in July. Private clouds and data centers may also be better options for certain applications because of security. Businesses simply need high IT stability.

The business is the largest provider of open-source software for the enterprise, with applications for virtualization, integration, process automation and more.Īs the recent AWS outage showed, there are considerable risks relying on one public cloud platform. The $34 billion acquisition of Red Hat is key to this this strategy. The company has a deep portfolio of infrastructure software that can manage public and private clouds as well as traditional datacenters. The business had long lagged because of low margins and intense competition.Īlso, CEO Arvind Krishna, installed in April 2020, has focused on becoming the leader in the hybrid cloud business, which he believes is worth more than $1 trillion worldwide. The company has been making smarter moves of late that should boost the fortunes of this legacy tech name.Īmong them: IBM recently spun off Kyndryl Holdings ( KD (opens in new tab)), which was its information technology outsourcing division. But investors shouldn't through in the towel. IBM's biggest missteps were missing the early opportunities in the cloud and fumbling its efforts with artificial intelligence (AI). The stock price has declined from the $180s to the $130s – meanwhile, the broader market has posted a gain of nearly 280%. The past decade has not been kind to shareholders of International Business Machines ( IBM (opens in new tab), $133.66).

Analysts' consensus recommendation: 2.47 (Buy).Analysts' opinions: 4 Strong Buy, 1 Buy, 12 Hold, 0 Sell, 0 Strong Sell.

Dropbox stock price graph