Despite posting nothing new, IBM (IBM) staged a strong rally. Shares traded at around $165 in May. It closed at $202.13 last week. The firm offers minimal growth and fair value. Why is IBM stock up?
IBM is at highs not seen since 2013 because the firm posted second-quarter results and guidance that met expectations. In Q2, CEO Arvind Krishna said that clients continued to seek IBM for its technology and expertise in enterprise AI.
IBM stock continues to offer investors in the AI sector good value. Chip stocks like Nvidia (NVDA), Intel (INTC), and AMD are pricier. Should IBM continue to meet quarterly expectations, the stock will keep rising.
In the hardware sector, HP Inc. (HPQ) has bearish risks. The printer segment is a drag on results. Home and office customers do not need HP’s printing solutions. HP’s sales of monthly subscriptions for printer ink only alienated customers, hurting their loyalty levels.
PC demand is still underwhelming. Although the back-to-school season typically lifts PC sales, people are reluctant to upgrade.
Consumers would rather buy a new Apple (AAPL) iPhone than replace a perfectly working old laptop.
HP is relying on the next-generation AI PC to drive sales. However, the knowledge worker and data scientists may not want to pay a premium for AI-related features.
