IBM: Fully Priced At 20x Earnings, Monitoring Momentum Trends (Rating Downgrade)
- Tech stocks, excluding semiconductors, have surged, with IBM benefiting from AI trends, but valuation concerns prompt a downgrade to a hold.
- IBM's Q3 results were mixed, with strong software growth but weak infrastructure performance, causing a significant stock drop despite a bottom-line beat.
- IBM's financial outlook includes solid free cash flow and potential EPS growth, but competition and debt sensitivity pose risks.
- Technical analysis shows IBM's strong momentum, with $200 as support and $232-$237 as resistance, but valuation limits further upside.
Michael Derrer Fuchs
Tech stocks away from the semiconductor industry have come back with a vengeance in recent months. The AI trade temporarily peaked at the onset of the second half, resulting in software and legacy technology areas outperforming. Then, following the
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