Jim Cramer tells investors IBM is a ‘trust but verify’ situation

Jim Cramer says the current IBM is not the 'old' IBM

CNBC’s Jim Cramer advised investors on Thursday to exercise caution as they debate buying IBM stock after the company announced its third-quarter earnings.

“Even after IBM’s rally of nearly 5% today, the stock is still significantly down from where it traded just a few months ago. I’m optimistic…but keep in mind that going forward this is a ‘confidence but verify ‘ situation continues,” he said. .

IBM beat revenue and earnings estimates in its third-quarter results reported Wednesday and raised its revenue outlook. The business software and consulting firm said sales were up 6.5% year-over-year.

While the strong US dollar is a headwind for the company, which expects it to have 7% less annual revenue than it would otherwise have made, IBM still reiterated its earlier this year forecast of about $10 billion in free cash flow.

“All things considered, and while IBM still has a lot of room for improvement, this quarter was a big step forward for them, and it was a big win for the bulls,” Cramer said.

He added that the company’s spin-off of its managed infrastructure services business in Kyndryl in November 2021 looks set to pay off.

“Remember, IBM went through that whole Kyndryl spin-off to become a growth company again, and that’s what they are now — they have a growth in spades,” he said.

Jim Cramer’s Guide to Investing

Click here to download Jim Cramer’s Guide to Investing for free to help you build long-term wealth and invest smarter.

Supply hyperlink

Leave a Comment