Jim Cramer: IBM's 25% Plunge Not Enough to Make Stock a Buy
CNBC's Jim Cramer stated that IBM's significant stock decline is insufficient to warrant a buy recommendation. He cited a broader shift in corporate IT spending away from software as a key concern for the company's future.
CNBC's Jim Cramer said on Tuesday that IBM has landed on the wrong side of a major shift in corporate technology spending. Cramer indicated that IBM's approximately 25% stock plunge is not enough to make the stock a buy at this time.
"That's the new reality, and I have no idea when it will change, which is why I can't recommend IBM, not even after today's severe decline," Cramer explained on "Mad Money." IBM shares tumbled sharply after the company preannounced disappointing second-quarter results, missing Wall Street expectations for revenue, earnings, and software revenue growth.
CEO Arvind Krishna acknowledged that the company "faltered" as several large customer deals failed to close, which Cramer interprets as a clear sign that corporations are reshuffling IT budgets towards artificial intelligence. He noted that businesses are increasingly prioritizing spending on cybersecurity, hardware, and AI "tokens."
Cramer pointed out that many of IBM's products and services fall into categories that are no longer top priorities for corporate IT departments. While acknowledging IBM still has attractive long-term businesses and the stock now offers a dividend yield of over 3%, Cramer remains too concerned about the shifting IT spending trends to issue a buy recommendation.