![]() ![]() ![]() Meanwhile, the slimmed-down IBM would allocate more of its cash and resources toward the expansion of its higher-growth hybrid cloud and AI businesses. That split, which was engineered by IBM's new CEO Arvind Krishna, would spin off the company's slow-growth managed IT services segment into a new company. But looking ahead, all eyes remain on IBM's upcoming split into two companies, which is expected to occur by the end of 2021. Those challenges could all weigh Alphabet's stock down, and explain why it still looks reasonably valued at 26 times forward earnings.Īnalysts expect IBM's revenue to rise less than 1% this year as its legacy businesses face easier year-over-year comparisons, and for its earnings to grow 27%. Lastly, Google Cloud remains an underdog in the cloud infrastructure market, and it may need to sacrifice its margins to gain meaningful ground against Amazon and Microsoft. Second, Apple's upcoming update for iOS 14, which will let users opt out of data tracking within apps, could throttle its growth in targeted ads. and Europe, which could result in fines or fresh restrictions on its core search engine and advertising businesses. However, it still faces three unpredictable headwinds.įirst, it faces ongoing antitrust challenges in the U.S. Both companies will face challenges this yearĪnalysts expect Alphabet's revenue and earnings to rise 24% and 19%, respectively, this year, as its ad sales accelerate after the pandemic ends. IBM claims many clients postponed big deals throughout the crisis, which largely offset its integration of Red Hat's faster-growing business over the past year. ![]() IBM struggled as the weakness of its legacy IT services, on-site software, and hardware segments offset the rising revenue at its cloud business, which grew 19% during the year and accounted for over a third of its top line. ![]()
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