In the past few days, the earnings season has picked up momentum in the USA. Numerous heavyweight companies have presented their figures for the fourth quarter and for the full year 2023. These include the technology company IBM and the conglomerate 3M. I will summarize the most important figures for you here in the „Closing Bell“:

IBM benefits from AI boom and reports strong figures The American IT company IBM, which has often been written off by some market observers in recent years, was able to surprise with its sales figures in the past quarter. In addition, the high growth expectations for the current year were convincing. The IBM share then rose sharply.

The high demand for consulting in the booming market of Artificial Intelligence (AI) is driving new customers to IBM. According to IBM management, orders related to this technology have doubled in the past few months.

Around one third of the new orders in the AI sector are for the Watsonx platform, with the remaining two thirds for services in the AI environment. Let’s take a closer look at IBM’s figures: Revenue in the past quarter increased by 4.1% to $17.38 billion. Net profit reached a value of $3.3 billion.

In the current year, revenue is expected to increase by 4 to 6%. Analysts had previously only expected growth of 3%. Also positive: A high free cash flow of around $12 billion is expected for 2024. From a fundamental perspective, the IBM share is anything but expensive and has been convincing with generous dividends for many years.

3M: Legal liabilities as a temporary burden factor The American conglomerate 3M, known for its yellow Post-it notes and considered one of the most innovative companies in the world, recently reported solid figures. Earnings per share reached $2.42, exceeding analyst estimates by 11 cents. Revenue reached $7.69 billion, slightly below estimates. In my opinion, both the recent quarterly figures and the outlook for 2024 are solid.

The question remains as to why the once strong 3M share still reacted negatively and also weakened in the past: This is mainly due to legal liabilities. Due to various ongoing lawsuits, 3M faced potential damages of over $30 billion.

According to market observers, however, the likelihood has recently increased that the company can reduce the claims to less than $6 billion through a settlement. At the latest, the 3M share would then be a real bargain with a current price-earnings ratio (P/E) of under 10 and a dividend yield of over 5%. So it is worth putting the 3M share on the watch list.