To The Moon

$IBM(IBM)$ is expected to release earnings on 24 Jan 2024 after the market closes (AMC). IBM have been enjoying very nice upside as investors begin to buy into the idea it is well-positioned to benefit from the AI boom.

This would be something that investors would look for new evidence on how IBM have progressed from the AI boom. Market is expecting IBM to report a revenue of $17.3 billion, up 3.6% from a year ago, with profit of $3.79 a share.

Analyst is expecting IBM to be well positioned to benefit from a host of tailwinds in 2024 and beyond, driven by a combination of enterprise IT spend improving to drive productivity and AI-centric tailwinds that could drive upside to consulting and software segments over time.

But we need to also note that IBM could be challenged by potential macroeconomic slowdown and the company managing through the tail-end of its most recent mainframe product cycle.

Technical is showing uptrend as investors stay confident and interested in IBM journey into AI despite some challenges.

IBM (IBM) Upcoming Earnings Guidance

IBM has issued earnings guidance for FY 2023.Revenue Growth estimate in the range of 3.0% to 5.0%.

We have seen positive price effect even though IBM missed its revenue estimate in the last 2 quarters result.

IBM (IBM) Last Earning Report

IBM last reported earnings on 25 Oct after the market close (AMC). IBM shares gained +4.9% the day following the earnings announcement to close at 142.15. Following its earnings release, 90 days ago, IBM stock has drifted +22.4% higher.

From the time it announced earnings, IBM traded in a range between 140.12 and 174.45. The last price (173.94) is closer to the higher end of range.

Estimated Implied Straddle for upcoming earnings is 4.1%. From how IBM price effect have been positive when implied straddle is within range of 4.0% to 4.2% in last 3 quarter, we could be looking at positive price effect.

IBM (IBM) Post Earnings Announcement Drift

IBM share price has drifted up 22.4% post earnings announcement. Using the last 12 quarters data, the average drift between earnings announcements is 3.7%. The current drift represents a positive 3.2 standard deviation move.

• Current post earnings announcement drift: 22.4%

• Historical average post earnings announcement drift: 3.7%

• Historical post earnings drift standard deviation move: ±6.9%

IBM (IBM) Post Earnings Movement

The options market overestimated IBM stocks earnings move 58% of the time in the last 12 quarters. The predicted move after earnings announcement was ±4.9% on average vs an average of the actual earnings moves of 4.9% (in absolute terms). This shows you that IBM tended to be more volatile than the options market predicted for the earnings stock price reaction.

IBM (IBM) Earnings Implied Volatility Crush

IBM's last earnings implied volatility (IV30) going into earnings was 26.2. The last time IBM released earnings, the implied volatility dropped to 17.6, resulting in an implied vol crush of 33%. 5 days after earnings, the 30 day IV was 12.7.

• Average Implied Volatility Crush For IBM Earnings: 29%

• Average 30 Day Implied Volatility 1 Day Before Earnings: 29.3

• Average IBM 30 Day IV for the Day of Earnings: 20.6

• Average 30 Day Implied Volatility 5 Days After Earnings: 19.0

IBM (IBM) Implied Move

Implied move actual is pretty low even when it is within range, hence, I would think IBM share price might be trading with a very small upside post earnings.

Summary

I personally feel that IBM have been a player since AI adoption began, they might be overlooked for their benefit. They have been around for quite a long time since the early AI inception.

This is their advantage as they could give us a positive outlook for 2024 as consulting and software will become an essential part of AI-centric deployment.

Appreciate if you could share your thoughts in the comment section whether you think IBM would continue to benefit from AI adoption and IBM strength in consulting and software could see double-digit growth?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.