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Some folks might pigeonhole IBM (NYSE:IBM) as an old-school business — the type of company your grandfather might have invested in. Don’t jump to any hasty conclusions, though. IBM stock might not be “sexy” or controversial, but it offers terrific growth prospects.
Granted, broad-market worries about technology stocks might make it emotionally difficult to invest in IBM. Yet, this doesn’t mean that all tech stocks are a no-go. As we’ll see, IBM shares have held up quite well amid 2020’s tech rout.
Besides, IBM isn’t the dinosaur that you might think it is. As the company dives headfirst into hybrid-cloud and other future-facing segments, there’s a strong case to consider that just maybe, Big Blue is the best blue-chip you can own.
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| Ticker | Company | Recent Price |
| IBM | $140.84 |
IBM Stock Is a Relatively Solid Performer
Using the Nasdaq as a proxy for technology stocks in general, we can see that IBM stock has fared comparatively well in 2022 so far. As of June 29, the Nasdaq lost 29.4% of its value while IBM shares were almost flat.
OK, so “almost flat” doesn’t sound like a compelling sales pitch, but think in relative terms. We’re living in a time of supply chain woes, high inflation and a less accommodative Federal Reserve.
IBM stock’s resilience despite these challenges is actually quite remarkable. Plus, the company pays a forward annual dividend yield of 4.65%. Not every technology company is that dedicated and generous to its shareholders.
Looking ahead, Bank of America analysts reportedly observed IBM Chief Financial Officer Jim Kavanaugh predicting that his company will “show greater resilience versus other tech hardware companies in uncertain macro conditions.” It’s hard to contest this claim, as IBM remains competitive with operations in 170 countries across 17 industries.
Wearing the Red Hat Well
When IBM acquired Red Hat in 2019, it might have seemed like a major gamble. Yet, it was actually a savvy move as it helped IBM shore up its cloud-market offerings.
As the data indicates, the company has succeeded in shaking off its old image as a provider of ancient, bulky computers. Today, IBM is knee-deep in the hybrid cloud, which is “all about providing a platform that can straddle multiple public clouds, private clouds, and on-premise properties that our clients typically have,” according to the company.