Analysts have cited IBM’s potential in the public cloud as a reason for their positive outlook going forward. The company posted a very solid first quarter, as the cloud proved to be big in the earnings reports, as did Red Hat, the software giant the firm bought in 2019. Red Hat’s open hybrid cloud technologies are now paired with the unmatched scale and depth of IBM’s innovation and industry expertise, and sales leadership in more than 175 countries.
IBM stock investors receive a 5.06% dividend. The $158 price objective at Stifel compares with a $140.79 consensus target and Wednesday’s closing print of $134.24.
Microsoft
This is a more conservative way for investors to participate in the massive cloud growth. Microsoft Inc. (NASDAQ: MSFT) develops, licenses and supports software, services, devices and solutions worldwide. The company operates in the following three segments.
The Productivity and Business Processes segment offers Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, Microsoft Viva, and Skype for Business; Skype, Outlook.com, OneDrive and LinkedIn; and Dynamics 365, a set of cloud-based and on-premises business solutions for organizations and enterprise divisions.
The Intelligent Cloud segment licenses SQL, Windows Servers, Visual Studio, System Center and related Client Access Licenses. GitHub provides a collaboration platform and code hosting service for developers, while Nuance provides health care and enterprise AI solutions, and Azure is a cloud platform. It also offers enterprise support, Microsoft consulting and nuance professional services to assist customers in developing, deploying and managing Microsoft server and desktop solutions, as well as training and certification on Microsoft products.
The More Personal Computing segment provides Windows original equipment manufacturer (OEM) licensing and other non-volume licensing of the Windows operating system; Windows Commercial, such as volume licensing of the Windows operating system, Windows cloud services and other Windows commercial offerings; patent licensing; and Windows Internet of Things.
This segment also offers Surface, PC accessories, PCs, tablets, gaming and entertainment consoles and other devices; Gaming, including Xbox hardware and Xbox content and services; video games and third-party video game royalties; and Search, including Bing and Microsoft advertising. The company sells its products through OEMs, distributors and resellers, as well as directly through digital marketplaces, online stores and retail stores.
The ChatGPT AI deal was in the news in a big way after it was disclosed that Microsoft had invested an additional $10 billion in the AI module after starting off with a $1 billion investment in 2019. Many feel that the venture into AI could be a huge tailwind for the company’s surging cloud business. It has been reported that Microsoft will receive 75% of OpenAI’s profits until it claws back its investments, after which it will have a 49% stake in the firm.
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