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IBM Cloud, Watson & AI Solutions Gain Traction in Europe

Zacks Equity Research

International Business Machines Corporation IBM is riding on robust adoption of IBM cloud, Watson and AI solutions, driven by expanding Europe-based clientele.

The company is all set to help Spain-based tourism Group, Grupo Piñero, to deliver engaging tourism and leisure experiences to customers.

Grupo Piñero intends to enhance its IT infrastructure and boost additional IT capacity to deal with seasonal surge in tourism, with IBM’s cloud and AI solutions.

Moreover, IBM Watson’s AI and business analytics capabilities will aid Grupo Piñero to address fluctuations in demand and manage seasonality. This, in turn, will boost profitability and offer high-quality traveler experience.

Further, IBM will aid Grupo Piñero develop new applications that utilize weather data from The Weather Company, and IBM Watson, to forecast peaks in room occupancy. Grupo Piñero will also employ IBM Cloud Pak for Applications running on Red Hat OpenShift platform, and IBM Watson Open Scale technology to efficiently enhance business operations.

We believe increasing adoption of IBM Cloud, Watson and AI solutions and growing clout of “weather data” from IBM’s The Weather Company, is anticipated to drive the company’s top line, in the days ahead.

Noteworthy Initiatives to Bolster Presence Across Europe

IBM’s robust familiarity with managing and implementing cloud platforms will act as a tailwind. IBM cloud is witnessing significant adoption across businesses based in Europe.

Moreover, IBM has 18 availability zones across Europe, Asia and North America in the recent past. The company has also obtained Germany's C5 attestation. Given the increasing data related regulations, including the likes of European Union’s (EU) GDPR, businesses are pursuing ways to manage data better.

Additionally, IBM Cloud offers local EU-based support to its clientele by which access can be confined to solely EU-based IBM employees. These factors are aiding the tech giant expand presence in Europe.

IBM Cloud Gaining Traction

IBM’s concerted efforts seem to be materializing. Moreover, attempt to bolster hybrid cloud business with Red Hat acquisition is likely to bolster the company’s prospects.

The continued robust adoption of IBM Cloud is expected to benefit IBM, going forward. According to latest third quarter data from Synergy Research, IBM is benefiting from strength in hosted and managed private cloud offerings.

International Business Machines Corporation Revenue (TTM)

International Business Machines Corporation Revenue (TTM)
International Business Machines Corporation Revenue (TTM)

International Business Machines Corporation revenue-ttm | International Business Machines Corporation Quote

In third-quarter 2019, IBM’s Cloud & Cognitive Software segment’s revenues-external improved 8% year over year (on cc basis) to $5.3 billion. Segmental revenues pertaining to Cloud surged 63%. Revenues from cloud and data platforms improved 19% year over year.

To Conclude

IBM’s advanced cloud, AI and ML capabilities, blockchain, among others poises its offerings well to gain robust adoption.

We believe the ongoing deal wins and expanding customer base will aid IBM strengthen competitive position in the cloud market against cloud vendors including Amazon Web Services (AWS), Microsoft Azure, Google Cloud, and Alibaba Cloud.

Zacks Rank & Key Picks

IBM currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks worth considering in the broader sector are Keysight Technologies Inc. KEYS, Fortinet, Inc. FTNT and Marchex, Inc. MCHX. All the three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Keysight, Fortinet and Marchex is currently pegged at 9.1%, 14% and 15%, respectively.

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