In a way, International Business Machines (IBM -1.05%) suffers from being a tech stock with a long history. It isn't necessarily seen as an innovative company, and it's safe to say few consider it to be a true leader or must-hold stock in the crowded sector.
So that makes it a bit of a sleeper, particularly in light of its freshly released quarterly earnings report. If the company's projections prove accurate, it's going to have quite the year to celebrate in 2024.
A double beat, combined with strong guidance
IBM's final set of 2023 quarterly figures were published after market close on Wednesday, and investors immediately took notice. And the stock closed the day on Thursday with a 9% rise.
The tech stalwart managed to grow its fourth-quarter revenue by 4% over the same period of 2022 to $17.4 billion. Adjusted non-GAAP (generally accepted accounting principles) net income bounced even higher, rising by 9% to hit $3.6 billion ($3.87 per share); that, by the way, makes for an adjusted net margin of over 20%. Those two line items both beat the average analyst estimates.
Now, most investors trade on future potential, not trailing performance. The vision in the crystal ball for IBM was more enticing than those end-of-2023 numbers.
While full-year 2024 guidance was sparse, it was nonetheless positive and encouraging. Revenue should continue to head north, with anticipated mid-single-digit percentage growth over 2023. Free cash flow is expected to by $12 billion, well higher than the $10.9 billion consensus analyst estimate.
Poised for more pops
Those two pieces of guidance were more than enough to get investors juiced about IBM on Thursday, and their excitement is justifiable. IBM is well positioned in all of its segments to capitalize on accelerated IT spending, especially when we consider that we're at the dawn of the artificial intelligence (AI) era. The company's expertise will surely be needed, and the market was made well aware of that Wednesday night.
