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IBM to Retrench About 8,000 Jobs to Move Toward AI Automation

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International Business Machines Corporation (IBM - Free Report) is likely to halt the hiring process as it reportedly aims to replace around 8,000 jobs, with AI primarily replacing back-office functionalities in the human resource domain. The company plans to slash 30% of non-customer facing roles gradually in the next five years with finance, accounting and HR being the domains most likely to be affected by it. This is the second such announcement from IBM as it announced the 3,900-job cutting earlier this year.

The adoption of advanced AI capabilities comes with certain advantages, which are the main driving force toward automation. AI automates several high-volume repetitive tasks in the enterprise’s everyday operations. These free up human resources that can then be utilized in other creative areas. In a relatively short time, AI can process large amounts of data and generate actionable insights faster and accelerate the decision-making process. Workflow automation can significantly minimize the probability of errors and reduce operational expenses.

Owing to these advantages, several tech giants and big corporate houses are opting to include AI technology into their business operations. Industry trends indicate growing adoption of AI is likely to gain further momentum in the near future. Even though the rapid integration of AI is estimated to add $16 million to the global economy by 2030, about 18% of the global workforce (mostly in developed countries) is likely to be affected by it.

Nevertheless, IBM is poised to benefit from strong demand for hybrid cloud and AI, driving growth in Software and Consulting. The company’s growth is expected to be driven primarily by analytics, cloud computing, and security in the long haul. A combination of a better business mix, improving operating leverage through productivity gains and increased investment in growth opportunities will drive profitability. In addition, lower operating expenses due to a truncated global workforce are likely to improve its liquidity. .

The stock has lost 7.2% in the past year compared with the industry’s decline of 8.8%.

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Image Source: Zacks Investment Research

IBM currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

InterDigital, Inc. (IDCC - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 170.89%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 579.03%.

It is a pioneer in advanced mobile technologies that enables wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular and wireless 3G, 4G and IEEE 802-related products and networks.

Akamai Technologies, Inc. (AKAM - Free Report) , carrying a Zacks Rank #2(Buy), delivered an earnings surprise of 4.86%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 6.06%.

It is a global provider of content delivery network (CDN) and cloud infrastructure services. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Its offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.

Meta Platforms Inc. (META - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 15.46%, on average, in the trailing four quarters. Meta Platforms is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps like photo and video-sharing app Instagram and WhatsApp messaging app owing to acquisitions.

Meta is considered to have pioneered the concept of social networking, which is why it enjoys a first mover’s advantage in this market. As developed regions mature, Meta undertakes measures to drive penetration in emerging markets of South East Asia, Latin America and Africa.

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