Win the Cloud Wars with a Position in IBM Stock

A robust cloud strategy remains a key component for growth in International Business Machines stock

When investors think of cloud computing, oftentimes their first thought is Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), or Amazon (NASDAQ:AMZN). These are all viable ways to bet on the cloud. But traders tend to ignore International Business Machines (NYSE:IBM) stock and I feel that’s a mistake.

IBM stock is a surprising pick for the burgeoning cloud industry
Source: JHVEPhoto / Shutterstock.com

I’ll grant that the company hasn’t been known as a tech leader in a long time. Plus, buying International Business Machines stock isn’t necessarily a get-rich-quick strategy.

Still, with a strong cloud component that keeps up with Google and other competitors in the space, it might be worthwhile to look into IBM stock as a solid addition to your tech holdings.

Join the Cloud Revolution with IBM Stock

In order to make its presence known amid the hyper-competitive cloud-computing space, IBM stunned the tech world when it announced and then finalized its $34 billion acquisition of Red Hat. Tech journalists spent a great deal of time focusing on Red Hat’s open-source culture. They also wondered whether IBM’s old-school business model would stifle said culture.

That’s a significant issue, no doubt, but let’s not bury the headline here: the Red Hat acquisition sets IBM up as a potential leader in the hybrid-cloud niche. Constellation Research analyst Holger Mueller forecasts that this “creates a lot of revenue” for IBM. By the way, that’s a projection I wholeheartedly agree with.

IBM’s senior vice president of cloud and cognitive software, Arvind Krishna, asserts that IBM’s foray into the hybrid cloud “unlocks tremendous value and is the only way forward for our clients.”

Moreover, as Krishna points out, IBM’s acquisition of Red Hat’s hybrid-cloud technology will promote not only an open-source environment (which I firmly believe to be a positive development in the industry), but also a “cloud agnostic” technology that operates not only within clouds, but also between them.

Krishna stated, “We are providing the essential tools enterprises need to make their multi-year journey to cloud on common, open standards that can reach across clouds, across applications and across vendors with Red Hat.”

IBM’s Cloud Footprint Goes Global

One of the best features of cloud computing is that it’s building connections across borders through the power of technology. With a global cloud network comprising 60 data centers around the world, IBM stock is surprisingly relevant. The company has become a model of power, reach, and cost-efficiency with its expansive cloud network.

Yet, there’s much more ground to cover. The company is preparing to lead the charge with the launch of its IBM Cloud multizone region in Latin America. This initiative is expected to roll out by late 2020. Headquartered in São Paulo, Brazil, the multizone region will provide a multitude of cloud-centered services. This includes enterprise-grade cloud infrastructure as well as artificial intelligence-enhanced cloud services.

Talk about a sector with room for growth: industry experts estimate that 80% of Latin American companies’ workloads have yet to be moved to the cloud. Further, IBM’s multizone region initiative sets the company up as a first mover into the region and the industry. Indeed, IDC Latin America consulting vice president Alejandro Florean envisions mutual benefit as the company provides the region with enhanced hybrid-cloud computing capabilities.

Florean stated, “With this new cloud Multizone Region, IBM is well positioned to help enterprises in Latin America differentiate themselves in their industries by capitalizing on this emerging hybrid multicloud world.”

The Takeaway on International Business Machines Stock

Forget what you thought you know about IBM: the Red Hat acquisition and the multizone region initiative demonstrate that an old tech company can still innovate and move markets. With the company’s audacious moves into the hybrid-cloud space in view, I’m long-term bullish on the IBM stock price as the company shatters perceptions and reinvents itself as a serious cloud contender.

As of this writing, David Moadel did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2019/09/win-the-cloud-wars-with-ibm-stock/.

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