What happened
Shares of International Business Machines (IBM 0.06%) traded 5% higher at 3 p.m. ET, boosted by an impressive earnings report. Big Blue eclipsed Wall Street's targets across the board.
So what
IBM's third-quarter revenue rose 6% year over year to $14.1 billion. Adjusted earnings decreased by 2% to 1.81 per diluted share. Your average analyst would have settled for earnings near $1.77 per share on sales of roughly $13.5 billion.
IBM's management raised its revenue targets for the full year.
"With our year-to-date performance, we now expect full-year revenue growth above our mid-single digit model," said CEO Arvind Krishna in a statement.
Now what
The reformed IBM is all about artificial intelligence (AI) and hybrid cloud computing. The company sees robust demand for its solutions in these key categories, setting IBM up for strong growth in the long run.
"Our point of view is clear," Krishna said on the earnings call. "Hybrid cloud and AI are the two most transformational enterprise technologies of our time."
Today IBM's stock is down just 5% year to date, far outpacing the S&P 500 index and its 19% plunge. Yet, the stock is still changing hands at the modest valuation of 12 times forward earnings and 15 times trailing free cash flows.
Furthermore, IBM's stock offers a generous dividend yield of 5.1% on top of whatever future price gains may come.
IBM stock is a no-brainer buy for tech investors who want to own a top-quality business at a reasonable price.
