Jim Cramer: IBM stock is a buy following strong Q1 results

on Apr 20, 2022
  • IBM reported strong Q1 results and gave upbeat full-year guidance.
  • CNBC's Jim Cramer explains why he's bullish on IBM Corp stock.
  • Shares of the American IT company are roughly flat year-to-date.

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A day after IBM Corp (NYSE: IBM) reported strong results for its fiscal first quarter, CNBC’s Jim Cramer says the stock that’s roughly flat year-to-date is a buy.

Cramer is bullish on IBM/McDonald’s partnership

More than the quarterly performance, Cramer dubs IBM’s strategic partnership with McDonald’s a promising reason to hop onto the stock. This morning on “Squawk on the Street”, he said:

What they’re doing is using artificial intelligence to make it so that the orders are taken basically by IBM. They save two heads; they have the same level of success that individuals do. And franchises basically save a fortune.

At a PE multiple of 27, the influential investor sees IBM a fairly inexpensive stock to buy. Last week, Morgan Stanley said IBM was a place to hide amidst the growing macro risks.

IBM offered upbeat guidance for the full year

The information technology company also gave pleasing guidance for the full financial year last night. According to Cramer, there was a lot to like in IBM’s quarterly numbers. He noted:

Security was up 8.0%, that was up 2.0% before, that surprised me. Consulting was good, those who say it wasn’t, are missing the point. Software exceeded the street nicely. So, people who are negative on IBM, they’re going to miss the bus.

IBM is restructuring to benefit from artificial intelligence and hybrid cloud momentum. In 2021, it bought 15 companies to strengthen its footprint in this space.