Where Is IBM Stock Heading in 2019?

On January 22, IBM (IBM) is scheduled to release its fourth-quarter earnings after the market closes. In recent years, the company has aggressively targeted high-growth areas like the cloud, blockchain, and AI. IBM’s revenue growth hasn’t been consistent.

The fluctuating revenue growth, a slower-than-expected transition to the cloud, mounting competition, and softness in strategic imperatives has weighed heavily on IBM stock.

If we look at IBM’s stock price performance in 2018, it lost ~27% of its value, while it lost little more than 9% in 2017. IBM’s third-quarter revenue decline severely impacted its stock, which fell more than 20% between mid-October and the first week of November. In the fourth quarter of 2017, after 23 consecutive quarters with declining revenues, IBM posted revenue growth.

The revenue growth continued for two consecutive quarters before it was discontinued in the third quarter. With the fourth-quarter results just around the corner, IBM stock could get a boost if the company’s revenues and earnings grow and beat analysts’ estimates.

In comparison, IBM’s peers in the cloud space and technology sector (IYW) including Microsoft (MSFT) and Amazon (AMZN) have benefited significantly. Their stocks have risen 18% and 31%, respectively. In the past year, the S&P 500 Index (SPY) has fallen ~6%.