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 chairman Ginni Rometty during 'opening Keynote' in the CES 2019 spoke about the company's blockchain initiatives, 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 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 for stability, reliability and continuous scientific commercial use.
IBM also unveiled its intentions to open its IBM Q Quantum Computation Center in 2019 for commercial clients in Poughkeepsie, NY.
IBM along with its subsidiary The Weather Company reveals the latest worldwide weather forecasting system that will provide weather forecasting data and technology. The new Global High-Resolution Atmospheric Forecasting System ("GRAF") will be able to provide improved weather on an hourly basis, consequently enhancing the overall flying experience. This shows IBM's growing dominance in providing AI platforms that 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 views from both sides of the crowd on a topic and automatically creates perspectives 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. AI is an 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. It is a lot faster than legacy technologies in completing a transaction as there is no need for manual processing or authentication by intermediaries.
For 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 growth in growth opportunities.
Moreover, for 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. For a MarketsandMarkets report, AI in marketing market is envisioned to witness at CAGR of 29.8% to $ 40.1 billion by 2025 from $ 5 billion in 2017. The report favors the prospects of IBM's cognitive services and AI-powered Watson.
IBM has been a pioneer when it comes to helping businesses digitally transform and evolve. Among the others, the 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 the bolstering of the top line, in turn aiding IBM to better compete against peers.
Zacks Rank & Key Picks
IBM carries to 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 at 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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