Can IBM's (IBM) Quantum Computing Milestone Redefine Its Role in the Financial Services Market?

• Earlier this week, HSBC announced the world's first real-world application of quantum computing in financial markets, revealing that its collaboration with IBM and use of IBM's Heron quantum processor improved bond price prediction accuracy by 34% over conventional methods.
• This result marks a milestone for the commercial viability of quantum computing and underscores IBM's role as a leader in driving tangible value from advanced technology in financial services.
• We'll examine how this breakthrough in practical quantum technology may reinforce IBM's investment narrative and accelerate adoption of its emerging technologies.

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International Business Machines Investment Narrative Recap

To own IBM stock, I think an investor needs to believe that the company's push into advanced technologies like quantum computing, AI, and hybrid cloud will set IBM apart and translate into durable growth. The recent HSBC quantum computing breakthrough shows promise and highlights IBM's innovation edge, but key short-term drivers, such as demand for consulting and hybrid cloud services, remain most critical, while macroeconomic headwinds and competitive threats continue to be the primary risks to watch; the news may not materially shift these in the next quarter.

Among recent announcements, IBM's collaboration with ESPN to embed watsonx AI into fantasy football platforms stands out for reinforcing IBM's AI expertise beyond the enterprise, potentially supporting broader adoption of its technology across multiple markets. This aligns closely with IBM's current growth catalysts, especially leveraging AI and machine learning to drive real-world value, and shows the company's ambition to monetize its innovations in both established and emerging arenas.

But on the flip side, investors should take note that competition from much larger public cloud providers, like Amazon and Microsoft, could...

Read the full narrative on International Business Machines (it's free!)

International Business Machines' narrative projects $74.4 billion revenue and $10.5 billion earnings by 2028. This requires 5.1% yearly revenue growth and a $4.6 billion increase in earnings from $5.9 billion today.

Uncover how International Business Machines' forecasts yield a $281.32 fair value, in line with its current price.

Exploring Other Perspectives

While consensus analysts projected IBM's revenue would grow to about US$73.3 billion by 2028, the most pessimistic scenario centers on IBM losing market share to hyperscale cloud competitors. These analysts expect much slower growth and remind you that professional opinions on IBM’s prospects before this week’s breakthrough varied significantly, make sure to check all sides and see how these forecasts may change as new breakthroughs are factored in.

Explore 16 other fair value estimates on International Business Machines - why the stock might be worth as much as 23% more than the current price!

Build Your Own International Business Machines Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your International Business Machines research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.
• Our free International Business Machines research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate International Business Machines' overall financial health at a glance.

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• This technology could replace computers: discover 26 stocks that are working to make quantum computing a reality.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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