The technology sector is in focus this week with CES 2019 underway. Notably, it is an annual technology tradeshow conducted by the Consumer Technology Association every year in January in Las Vegas.
International Business Machines Corporation’s (IBM - Free Report) chief executive officer (CEO) and president Ginni Rometty during ‘opening Keynote’ in the CES 2019 spoke about the company’s initiatives in blockchain, cloudand powering artificial intelligence (AI) technology through product rollouts and strategic deals.
Into the Headlines
IBM showcased IBM Q System One, the world's first integrated quantum computing system for commercial use. Quantum computers have the capability to solve highly complex tasks much faster than conventional supercomputers. IBM Q systems are designed to build expert knowledge and focus on research for practical purposes. The machine’s architecture is apt for experimental computing operations for stability, reliability and continuous scientific commercial use.
IBM also unveiled its intentions to open its first IBM Q Quantum Computation Center in 2019 for commercial clients in Poughkeepsie, NY.
IBM along with its subsidiary The Weather Company revealed the latest worldwide weather forecasting system that will provide weather forecasting data and technology. Available later this year, the all new IBM Global High-Resolution Atmospheric Forecasting System (“GRAF”) will be able to provide improved weather technology on an hourly basis, consequently enhancing the overall flying experience. This shows IBM’s growing dominance in providing AI platforms which will power future airlines.
Moving ahead in AI space, IBM announced the all new Project Debater — Speech by Crowd — to have a real-time debate with a human. It is an AI-driven platform that collects view points from both sides of the crowd on a given topic and automatically creates convincing viewpoints for or against the topic.
IBM’s latest move to showcase "fingernail sensor" prototype and launch tools with Medtronic, reveals its ambition to aggressively strengthen its foothold in AI, machine learning (ML) and healthcare space. IBM is working on the improvement of universal health by enabling AI-led analysis of how to monitor and track disease that will affect a person’s health. The company has created a Medtronic tool platform, to help diabetic patients. This effort of IBM holds a promise in the AI and healthcare space.
Blockchain & AI: A Long-Term Driver
IBM is steadily gaining ground in blockchain technology. Lately, blockchain technology has gained significant acceptability among financial providers due to its speed and security. Blockchain is much faster than legacy technologies in completing a transaction as there is no need for manual processing or authentication by intermediaries.
Per MarketsandMarkets report, blockchain technology is projected to reach $2.3 billion by 2021 from $210.2 million in 2016 at a CAGR of 61.5%. We believe IBM’s increasing investment and developments in this space poises it well to capitalize on growth opportunity.
Moreover, per a recent IDC report, worldwide spending on cognitive and AI systems is estimated to be over $77.6 billion by 2022 at a CAGR of 37.3% from 2017 to 2022. Per a MarketsandMarkets report, AI in marketing market is envisioned to witness a CAGR of 29.8% to $40.1 billion by 2025 from $5 billion in 2017. The report favors the prospects of IBM cognitive services and AI-powered Watson.
IBM has been a pioneer when it comes to helping businesses digitally transform and evolve. The tech giant continues to bring innovation to its services to help the enterprises leverage the emerging technologies, including the likes of cloud, AI, Internet of Things (“IoT”), among others.
IBM’s advanced AI, IoT, blockchain, cloud, ML capabilities, among others makes its offerings well poised to gain robust adoption. The traction witnessed by the company’s Watson Ads offering is bolstering the top line, in turn aiding IBM to better compete against peers.
Zacks Rank & Key Picks
IBM carries a Zacks Rank #3 (Hold).
ZAGG Inc (ZAGG - Free Report) , SS&C Technologies Holdings, Inc. (SSNC - Free Report) and Marvell Technology Group Ltd. (MRVL - Free Report) are a few stocks worth considering in the broader technology sector. All the three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for ZAGG, SS&C and Marvell are currently pegged at 7.5%, 13.5% and 9.4%, respectively.
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