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Analysts Applaud IBM's Move To Make Watson Available Cross-Cloud

AMZN, IBM, MSFT | February 15, 2019

IBM (NYSE: IBM)’s move to make its Watson AI technology available on competing cloud services is a positive, analysts said following the computing company’s annual IBM Think gathering.

IBM said at the annual event this week in San Francisco that, rather than require customers to bring their data to Watson AI on IBM cloud services, the company will take Watson AI to them if they use another cloud service.

In the past, IBM has only made its Watson software available on IBM’s cloud computing service. But it announced at IBM Think that will now allow Watson to be used by customers with data that may be stored in competing cloud data centers, such as Microsoft Corporation (NASDAQ: MSFT)’s Azure and Amazon.com Inc. (NASDAQ: AMZN)’s Amazon Web Services.

BofA

IBM's new commitment to work across all platforms, including competing ones, to gain access to a bigger market opportunity was the most notable change in strategy at IBM and a positive one, Bank of America Merrill Lynch's Wamsi Mohan said in a Thursday note.

IBM didn’t update its 2019 guidance, but said the company is confident in its ability to meet Q1 earnings per share estimates, the analyst said.

BofA has a Buy rating on IBM with a price target of $165.

Morgan Stanley

Morgan Stanley’s Katy Huberty also focused on IBM’s new openness with Watson, as well as noting IBM’s announcement of new services to help customers migrate work to the cloud and manage hybrid cloud or multicloud environments.

Those services, Huberty said, will leverage IBM’s Global Business Services software services and consulting arm and its Global Technology Services infrastructure and hardware arm to provide end-to-end services, which the company said has favorable margins.

IBM management said there are no signs of a slowdown in consulting, which historically is a leading indicator of economic cycles, the analyst said.

Morgan Stanley has no rating available on IBM. The sell-side firm is advising Red Hat Inc (NYSE: RHT) in relation to IBM’s move to acquire the company.