International Business Machines Corporation IBM recently released an application building cum machine learning platform, Cloud Private for Data, on its Cloud Private platform. Cloud Private for Data is deployed as an application on Kubernetes. The new platform boasts of an in-memory database which improves efficiency by analyzing over 1 million inserts per second per node.

According to the press release, the fast new solution will be powered by the company’s corresponding platforms like “Data Science Experience, Information Analyzer, Information Governance Catalogue, Data Stage, Db2 and Db2 Warehouse.” It will enhance the capabilities of the new solution further.

This move of IBM will augment artificial intelligence (AI) accessibility across companies. This will also aid the companies to capitalize on applying the meaningful data insights generated structurally to transform business. The clients will benefit from the new platform’s data security feature as well.

Being enabled as microservices, the clientele can develop and use event-driven apps via machine learning tools. IBM has plans to run the new solution across all cloud platforms. The company is also looking forward to customize Cloud Private for Data solution industry-wise.

With a view to empower clientele’s AI journey, IBM formed Data Science Elite Team. The team of around 30 people is currently catering to roughly 50 clients. It provides free consultation to solve data science problems.

The clients are assisted with workshops on machine learning methodologies so that they can expand growth avenues. The team examines the client case and within two-three weeks offers discrete 3-4 deliverables.

What Investors Need To Know?

IBM’s stock has lost 8.8% of its value over the past year, narrower than the industry’s decline of 10.1%.

The number of companies using AI is increasing. Huge volume of data is being generated through a wide range of sources. Companies want to leverage AI to provide specific solutions and enhance solutions’ capabilities. IBM’s new Cloud Private for Data solution provides architecture to the companies to sort their data in such a way that inference aids them to realize business goals.

Per a recent report of ResearchandMarkets, the global enterprise AI market will reach $6.14 billion by 2022, from $0.845 million evaluation in 2017 at a CAGR of a whopping 48.7%. Strong adoption of AI will strengthen IBM’s Analytics offerings and consequently, boost its top-line growth.

Per a MIT Sloan report, out of surveyed 3000 business leaders, 85% believed that AI would enable competitive advantage. However, only 20% could realize it. IBM’s new Data Science Elite Team is organized to ease the client’s process of structuring, managing and strategizing the meaningful insights from the complex data.

Robust Q4 Performance

IBM reported fourth-quarter 2017 increase in year-over-year revenues after 22 quarters of consecutive decline.

The company delivered fourth-quarter non-GAAP earnings of $5.18 per share which was better than the year-ago figure by 3.4% and surged 56.9% sequentially.

Revenues of $22.54 billion increased 3.5% on a year-over-year basis. At constant currency (cc), revenues grew 1%. Moreover, revenues increased 17.7% sequentially.

The top-line performance can be attributed to higher cognitive solutions and systems revenues. Cognitive revenues were driven by robust performance from security, Internet of Things (IoT) and analytics offerings. Systems benefited from strong demand for storage and the launch of new z14 mainframe.

International Business Machines Corporation Revenue (Quarterly YoY Growth)

International Business Machines Corporation Revenue (Quarterly YoY Growth) | International Business Machines Corporation Quote

IBM is a dominant AI player. Cloud revenues on a trailing 12-month basis are now a record $17 billion, more than 20% of the company’s total revenues. Cloud revenues surged 27% on a cc basis from the year-ago quarter.

Revenues from analytics (largest of the company’s strategic imperatives) increased 6% at cc to $6.1 billion. Analytics results improved in the quarter on the back of strong growth in Business Intelligence & Data Discovery. Data Warehousing reported strong results.

In September 2017, IBM had launched new unified data system, which is supported by its DB2 technology and is built on IBM Power.

IBM’s new efficient solutions will enhance its analytics portfolio. The company is well poised to benefit from its growing presence in the AI market on an increasing clientele.

Zacks Rank & Key Picks

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

Veeva Systems Inc,VEEV , DST Systems, Inc DST and Analogic Corporation ALOG are better-ranked stocks in the broader technology sector, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Veeva Systems, DST Systems and Analogic Corporation have a long-term earnings growth rate of 17%, 10% and 7%, respectively.

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