How IBM’s Stock Continues Defying Expectations

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IBM, short for International Business Machines, is a legendary technology company. Incorporated in 1911, IBM has long been an iconic part of the IT services and technology sector.

IBM, short for International Business Machines, is a legendary technology company. Incorporated in 1911, IBM has long been an iconic part of the IT services and technology sector. The company has over a century’s history of proving technological marvels possible.


While the company has taken a backseat to Microsoft, Apple, and other IT companies since the turn of the century, it remains a viable blue-chip stock for investors. And the stock’s exceptional performance over the past two years makes it a must-have for any investor or trader with a respectable portfolio.


Experts, traders, investors, and anyone involved in the stock market knows that technology stocks haven’t experienced a good time in 2022. Yet, IBM has somehow defied expectations and continued ascending during challenging times. The stock has outperformed other stocks in the sector, gaining 3.8 percent over the past month. Meanwhile, other technology stocks in the Zacks SP 500 composite have only gained 0.8 percent.


Most experts continue scratching their heads over the stock’s performance. After all, IBM was one of the many companies to announce it wouldn’t be conducting business in Russia following the Ukrainian invasion. Generally, investors don’t welcome such news because sales are likely to suffer. However, the company’s continuous stock price rise proves otherwise.  


Why Investors and Traders Are Flocking to IBM’s Stock in 2022

Here’s why investors and traders are flocking to IBM’s stock in 2022:


Fantastic Dividend Yield

One of the reasons investors continue flocking to IBM’s stock in 2022 is because the company offers exceptional dividend yields, particularly compared to other competitors in the sector. The tech giant has a 4.86 percent dividend yield, far greater than the average 1.37 percent dividend yield in the technology sector. Such a fantastic dividend yield is enticing to investors, particularly in the current economic environment where uncertainty looms high.

Impressive Fundamental Factors

IBM’s fundamental factors also continue to draw in investors and traders. The company’s price-earnings ratio of 19.90, its price-to-sales ratio of 1.90, and price-cash flow ratio of 8.82 are extremely attractive to investors. They’re lower than the median values for the information technology sector, representing a significant discount for IBM stock.


While IBM’s revenue growth isn’t impressive, the company has shown signs of rebounding. In addition, IBM acquired 15 companies in 2021, planning to use them to improve its hybrid cloud and AI capabilities as it tries to adapt to a changing IT landscape.


These factors make IBM an excellent blue-chip stock that provides strong financial performance despite market expectations.

Revenue Growth in Most Business Segments

IBM’s financial reports for Q4 2021 and Q1 2022 were delightful news to investors. The company improved its revenue growth by 6.5 percent in Q4 2021 and 8 percent in Q1 2022. The company also held $1.2 billion in cash flow reserves in 2022, making it an excellent choice for investors.


However, more importantly, the company showed positive revenue growth for most business segments bar some. These include security, infrastructure, IBM Z, and infrastructure support and financing.


Regardless, the primary catalyst behind IBM’s performance is hybrid cloud revenue. The company’s hybrid cloud revenue increased to over $20 billion.


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