Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

IBM Q2 earnings preview: can the tech giant’s cloud revenue keep growing?

We look at when IBM is set to release their second quarter results, the highlights from the company's Q1, and the current analyst consensus.

When is IBM set to report their next set of results?

International Business Machines Corporation (IBM) is set to report their second quarter FY20 results next Monday, 20 July.

The analyst view remains mixed

Heading into IBM's second quarter results release, analysts remain mixed on the tech giant, with the stock commanding a Hold rating on average, according to MarketWatch.

That view looks well reflected in the average analyst price target on IBM – which currently stands at US$129.00 per share – implying some upside potential from current price levels, also according to MarketWatch.

This comes after IBM delivered a middling set of results in the first quarter, as overall revenue, net income and earnings per share (EPS) all declined. Specifically, the company saw its Q1 revenue fall by 3.4% to US$17.6 billion, while operating (non-GAAP) diluted earnings per share and net income both came in 18% lower at US$1.84 per share and US$1.6 billion, respectively.

Mind you, while the Group’s sales and earnings fell overall during the last quarter, IBM’s cloud division proved resilient, posting strong growth in spite of the challenging operating environment, with total cloud revenue rising 19% to US$5.4 billion.

Red Hat – which IBM acquired for US$34 billion in 2019 – also continued to grow at a solid rate in Q1, with revenue rising 18%.

Following this robust showing in the first quarter, IBM’s Cloud & Cognitive Software business segment will likely be closely watched by investors during the upcoming earnings release.

‘Our first-quarter performance in cloud is a reflection of the trust clients place in IBM's technology and expertise today, and positions us to continue building an enduring hybrid cloud platform for the future,’ said IBM's Chief Executive, Arvind Krishna.

While IBM continues to struggle with growth, the company maintained strong margins during the prior quarter – a trend investors will likely be keen to see remain in tact as we head into the Q2. Here, IBM's gross profit margins for its Cloud & Cognitive Software business hit 75.4%, while its Global Technology Services gross margins reached 34.0%. Overall, gross profit margins remained steady in the first quarter – at 45.1%.

Unsurprisingly, as part of the Q1, IBM’s management withdrew its full-year guidance as a result of elevated levels of uncertainty caused by the coronavirus pandemic. Even so, it was flagged that the company would ‘reassess this position based on the clarity of the macroeconomic recovery at the end of the second quarter.’

IBM share price: recent performance in focus

Finally, while IBM has seen its share price trade well off the lows it recorded in March – rising close to 30% in that period – the stock's longer-term trend remains a negative one.

Indeed, in the last six months IBM’s stock is down ~10% and in the last five years the tech stock is down close to 30%.

IBM last traded at US$124.01 per share.

Want to trade IBM: long and short?

Create an IG trading account or log in to your existing account to get started now

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.