We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
IBM Inks 3-Year Deal to Power Quantum Computing in HSBC Bank
Read MoreHide Full Article
International Business Machines Corporation (IBM - Free Report) recently inked a three-year deal with HSBC Bank to explore the applications of quantum computing within the gamut of financial services. The collaboration will aim to leverage IBM’s key expertise in quantum computing to mitigate risks and minimize fraudulent activities in financial transactions.
Per the agreement, HSBC will join the IBM Quantum Accelerator program that will offer it in-depth knowhow of the quantum computing systems applications within the banking domain. It will gain access to IBM’s 127-qubit processor, Eagle, increasing the speed and efficacy of high-performance computing resources.
The increased qubit count allows users to explore problems at a new level of complexity while running various applications. 'Eagle' is the first IBM quantum processor whose scale of operations is virtually impossible for a classical computer to reliably simulate. HSBC intends to utilize these capabilities for pricing and portfolio optimization, thereby transforming its operations that legacy computers fail to achieve. This, in turn, is likely to sow the seeds for future applications and technological innovations within the broader financial industry to reduce the risks of fraudulent transactions.
IBM expects its growth to be driven primarily by analytics, cloud computing and security services. A better business mix, improving operating leverage through productivity gains and increased investments in growth opportunities will likely drive its profitability.
However, IBM’s ongoing, heavily time-consuming business model transition to the cloud is likely to be a headwind in the near term. Although the public cloud market is expected to be one of the fastest-growing IT categories with about 25% to 30% CAGR over the next five years, IBM is unlikely to keep up with its competitors. High integration risks from continuous acquisition spree are potent challenges. In addition, weakness in its traditional business and foreign exchange volatility remain significant concerns. Also, higher profit on lower revenues indicates that the company has been lowering costs to maintain profits. We believe that the scope for further cost-cutting is limited. Consequently, if costs are further reduced, there could be a negative impact on product quality. It could also lead to an additional delay in launching products, denting its long-term growth potential to some extent.
The stock has lost 2.4% over the past year compared with the industry’s decline of 3.7%. We are impressed with the inherent growth potential of this Zacks Rank #2 (Buy) stock.
Image Source: Zacks Investment Research
Hewlett Packard Enterprise Company (HPE - Free Report) , carrying a Zacks Rank #2 (Buy), is another top-ranked stock in the industry. It has a long-term earnings growth expectation of 6% and delivered an earnings surprise of 10.7%, on average, in the trailing four quarters. Over the past year, Hewlett Packard has gained a modest 10.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings estimates for the current year for the stock have moved up 8.2% over the past year, while that for the next fiscal are up 14.9%. Hewlett Packard has been pursuing acquisitions to focus more on high-margin hybrid IT models that leverage on-premises and cloud-computing power. It views AI, Industrial IoT and distributed computing as the next major markets.
Viavi Solutions Inc. (VIAV - Free Report) , carrying a Zacks Rank #2, is a solid pick for investors. It delivered a modest earnings surprise of 15.6%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 10.8% since March 2021, while that for the next year are up 9.2%.
Viavi boasts a comprehensive product portfolio that offers end-to-end network visibility and analytics that help build, test, certify, maintain and optimize complex physical and virtual networks. Its wireless and fiber test solutions are in the early stages of a multi-year investment cycle fueled by the transition of OEMs and service providers to superfast 5G networks. Viavi expects growth to be driven by the secular demand for 5G wireless, fiber and 3D sensing.
Knowles Corporation (KN - Free Report) sports a Zacks Rank #1. It has a long-term earnings growth expectation of 10% and delivered a modest earnings surprise of 14.9%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 21% since March 2021.
The transformation from an acoustic component supplier to an audio solutions provider has enabled Knowles to migrate to higher-value solutions and increase content per device. This, in turn, has empowered the company to capitalize on the positive macro trends in audio and edge processing solutions.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
IBM Inks 3-Year Deal to Power Quantum Computing in HSBC Bank
International Business Machines Corporation (IBM - Free Report) recently inked a three-year deal with HSBC Bank to explore the applications of quantum computing within the gamut of financial services. The collaboration will aim to leverage IBM’s key expertise in quantum computing to mitigate risks and minimize fraudulent activities in financial transactions.
Per the agreement, HSBC will join the IBM Quantum Accelerator program that will offer it in-depth knowhow of the quantum computing systems applications within the banking domain. It will gain access to IBM’s 127-qubit processor, Eagle, increasing the speed and efficacy of high-performance computing resources.
The increased qubit count allows users to explore problems at a new level of complexity while running various applications. 'Eagle' is the first IBM quantum processor whose scale of operations is virtually impossible for a classical computer to reliably simulate. HSBC intends to utilize these capabilities for pricing and portfolio optimization, thereby transforming its operations that legacy computers fail to achieve. This, in turn, is likely to sow the seeds for future applications and technological innovations within the broader financial industry to reduce the risks of fraudulent transactions.
IBM expects its growth to be driven primarily by analytics, cloud computing and security services. A better business mix, improving operating leverage through productivity gains and increased investments in growth opportunities will likely drive its profitability.
However, IBM’s ongoing, heavily time-consuming business model transition to the cloud is likely to be a headwind in the near term. Although the public cloud market is expected to be one of the fastest-growing IT categories with about 25% to 30% CAGR over the next five years, IBM is unlikely to keep up with its competitors. High integration risks from continuous acquisition spree are potent challenges. In addition, weakness in its traditional business and foreign exchange volatility remain significant concerns. Also, higher profit on lower revenues indicates that the company has been lowering costs to maintain profits. We believe that the scope for further cost-cutting is limited. Consequently, if costs are further reduced, there could be a negative impact on product quality. It could also lead to an additional delay in launching products, denting its long-term growth potential to some extent.
The stock has lost 2.4% over the past year compared with the industry’s decline of 3.7%. We are impressed with the inherent growth potential of this Zacks Rank #2 (Buy) stock.
Image Source: Zacks Investment Research
Hewlett Packard Enterprise Company (HPE - Free Report) , carrying a Zacks Rank #2 (Buy), is another top-ranked stock in the industry. It has a long-term earnings growth expectation of 6% and delivered an earnings surprise of 10.7%, on average, in the trailing four quarters. Over the past year, Hewlett Packard has gained a modest 10.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings estimates for the current year for the stock have moved up 8.2% over the past year, while that for the next fiscal are up 14.9%. Hewlett Packard has been pursuing acquisitions to focus more on high-margin hybrid IT models that leverage on-premises and cloud-computing power. It views AI, Industrial IoT and distributed computing as the next major markets.
Viavi Solutions Inc. (VIAV - Free Report) , carrying a Zacks Rank #2, is a solid pick for investors. It delivered a modest earnings surprise of 15.6%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 10.8% since March 2021, while that for the next year are up 9.2%.
Viavi boasts a comprehensive product portfolio that offers end-to-end network visibility and analytics that help build, test, certify, maintain and optimize complex physical and virtual networks. Its wireless and fiber test solutions are in the early stages of a multi-year investment cycle fueled by the transition of OEMs and service providers to superfast 5G networks. Viavi expects growth to be driven by the secular demand for 5G wireless, fiber and 3D sensing.
Knowles Corporation (KN - Free Report) sports a Zacks Rank #1. It has a long-term earnings growth expectation of 10% and delivered a modest earnings surprise of 14.9%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 21% since March 2021.
The transformation from an acoustic component supplier to an audio solutions provider has enabled Knowles to migrate to higher-value solutions and increase content per device. This, in turn, has empowered the company to capitalize on the positive macro trends in audio and edge processing solutions.