IBM (IBM.US) is bullish on pre-Wedbush performance: AI and hybrid cloud are the main growth engines, Q3 performance will exceed expectations.

IBM (IBM.US) will announce its third-quarter performance after the US stock market closes on Wednesday. Wall Street generally expects IBM's third-quarter revenue to be $16.1 billion, with adjusted earnings per share of $2.45. The investment bank Wedbush predicts that IBM's performance in the third quarter will exceed market expectations, benefiting from a diversified product portfolio, strong demand for artificial intelligence (AI), and continued expansion of hybrid cloud business. Wedbush analysts led by Daniel Ives stated in an investor report, "The market generally expects IBM's third-quarter revenue to be $16.1 billion and adjusted earnings per share (EPS) to be $2.45. We believe the company's third-quarter performance is likely to meet or even exceed these levels, as the acceleration of AI demand combined with the company's strengthened software product portfolio especially WatsonX is able to seize opportunities in enterprise generative AI (GenAI) scenarios, with the related business currently scaling at $7.5 billion." The analysts pointed out in the report that IBM has already embedded AI capabilities in over 70 workflows, including sales, finance, and marketing. At the same time, the company continues to see synergies and strong demand in its Red Hat and HashiCorp products and integrations, which will provide additional upside space for growth in the coming quarters. Wedbush also emphasized the momentum brought to IBM by recent partnerships. These include collaborations with Anthropic to integrate the Claude model into IBM software to create enterprise AI solutions; and with S&P Global, Inc. to embed the intelligent agent framework of WatsonX Orchestrate into S&P's extensive product ecosystem. The analysts added, "We believe IBM is well-positioned in the current transition to hybrid cloud and AI applications, and its presence in the field of quantum computing will drive the company towards long-term profitable growth, while its strategic partnerships will further expand its market footprint." Wedbush has included IBM in its "Best Investment Ideas List" and "Ives AI 30 List." It is reported that the "Ives AI 30" list covers 30 technology companies selected by Wedbush analysts, led by Daniel Ives, that will "define the AI landscape in the coming years."