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Business Insider
2 hours ago
- Business Insider
This Is Why Jim Cramer Is Bullish on IBM Stock
On a recent episode of his show, CNBC's Jim Cramer shared his thoughts on tech giant IBM (IBM) after a caller asked for his opinion. He said that the company's most recent earnings report wasn't bad at all and suggested that its current share price might present a good buying opportunity. Interestingly, what really stood out to Cramer was IBM's leadership in quantum computing, which he believes will soon become a much bigger topic among tech investors. He also highlighted IBM's strong software lineup and noted that the company is doing many things right across the tech space. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. It is worth noting that Cramer's optimism seems justified. Indeed, the company recently developed a new algorithm called Relay-BP that was designed to help quantum computers detect and fix errors more effectively. This is a major step forward because quantum systems use qubits, which are units of information that are highly sensitive to outside interference. Notably, Relay-BP proved to be up to 10 times more accurate than earlier techniques, and it runs more efficiently by using less computing power. This makes it more practical for real-world applications. As a result, the company plans to first use the algorithm to stabilize quantum memory and then expand its use to a wider range of quantum operations. While this likely isn't a final solution, it does move the industry much closer to making scalable, everyday quantum computing a reality. Therefore, this progress seems to support Cramer's view that IBM is well-positioned for the future, especially in areas like quantum computing. Is IBM a Buy, Sell, or Hold? Turning to Wall Street, analysts have a Moderate Buy consensus rating on IBM stock based on seven Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average IBM price target of $296.15 per share implies 23.7% upside potential.
CNBC
5 hours ago
- CNBC
Trump administration weighs 10% stake in Intel via Chip Act grants, making government top shareholder
The Trump administration is discussing taking a 10% stake in Intel, according to a Bloomberg report on Tuesday, in a deal that could see the U.S. government become the chipmaker's largest stakeholder. As part of a potential deal, the government is also considering converting some or all of Intel's grants from the 2022 U.S. CHIPS and Science Act into equity in the company, the report said, citing a White House official and other people familiar with the matter. At the embattled chipmaker's current market value, a 10% stake would be worth roughly $10.4 billion. Meanwhile, Intel has been awarded about $10.9 billion in Chips Act grants, including $7.9 billion for commercial manufacturing and $3 billion for national security projects. The report noted, however, that it remains unclear if the idea has gained traction broadly within the administration or whether officials have broached the possibility with affected companies. It added that the exact size of the stake remains in flux, and it remains unclear whether the White House will actually proceed with the plan. Intel and the White House did not immediately respond to CNBC's queries regarding the report. Intel, once a dominant force in the U.S. chip industry, has fallen behind global competitors in advanced chip manufacturing. Reviving the former U.S. chip champion has become a national priority in Washington, with reports about a potential government stake in the company first circulating last week. The company has been the largest recipient of the 2022 Chips Act, passed with bipartisan support under the Biden administration, as part of efforts by Washington to revitalize U.S. leadership in semiconductor manufacturing. The bill allocated $39 billion in grants for American semiconductor manufacturing projects, with funding committed to many of the world's chipmakers such as TSMC and Samsung, as well as American chip companies such as Nvidia, Micron and GlobalFoundries. U.S. President Donald Trump, though supporting the general goals of the Chips Act, has been a vocal critic of the bill and even called for its repeal earlier this year. While republican lawmakers in Washington have been reluctant to act on that call, U.S. Commerce Secretary Howard Lutnick said in June that the administration was renegotiating some of the bill's grants. If Intel's Chip Act funds were to be converted into a potential government stake in the company, it could decrease the total amount of capital infused into the company as part of any deal by Washington. However, it would serve as the latest example of the Trump administration's interest in building government-backed national champions in strategic industries. Intel has struggled to gain an advantage in the artificial intelligence boom and has yet to capture a significant customer for its manufacturing business despite spending heavily on it. Some analysts have argued that government intervention is essential for the struggling chipmaker and for the sake of U.S. national security. Others contend that Intel's problems are deeper than funding, and it is not clear how the government can help with that. Analysts have also noted that Trump may be able to sway companies to buy Intel chips or assist indirectly, through tariffs and regulation. On Tuesday, it was announced that SoftBank was investing $2 billion in Intel. According to LSEG, the investment is worth about 2% of Intel, making SoftBank the fifth-biggest shareholder. Masayoshi Son, Chairman & CEO of SoftBank Group, said: "This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role." Intel investors had initially welcomed news of the government investment, which resulted in a share rally of nearly 9% on Aug. 14. Shares of Intel fell over 3% on Monday on the Bloomberg report, but rebounded by more than 5% in overnight trading on the trading platform Robinhood following news of a Softbank investment. Intel CEO Lip-Bu Tan, who was appointed in March 2025, met with Trump at the White House last week, after the U.S. president had called for his ousting due to his past ties to China. After the meeting, Trump had changed his tune on the Intel chief, saying he had "an amazing story." It's unclear if a potential government stake in the company had been discussed at the time. Read the full Bloomberg story here.
CNBC
10 hours ago
- CNBC
Analysts downplay AI bubble worries as Altman says some investors will be left 'very burnt'
The artificial intelligence boom that Sam Altman helped ignite with ChatGPT in late 2022 is starting to make even him uneasy. Startups with little more than a pitch deck are raising hundreds of millions. Valuations have become "insane." Capital is chasing a "kernel of truth" with feverish speed. The OpenAI CEO still believes the long-term societal upside of AI will outweigh the froth, and he's ready to keep spending in pursuit of that goal. "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes," he said at a recent dinner with reporters. "Is AI the most important thing to happen in a very long time? My opinion is also yes." He repeated the word 'bubble' three times in 15 seconds, then half-joked, "I'm sure someone's gonna write some sensational headline about that. I wish you wouldn't, but that's fine." While Altman warned that valuations are now out of control, he's ready to shell out on more infrastructure. "You should expect OpenAI to spend trillions of dollars on datacenter construction in the not very distant future," Altman said. "And you should expect a bunch of economists wringing their hands, saying, 'This is so crazy, it's so reckless,' and we'll just be like, 'You know what? Let us do our thing.'" OpenAI is already looking beyond Microsoft Azure's cloud capacity, and is shopping around for more. The company signed a deal with Google Cloud this spring and, according to Altman, OpenAI is "beyond the compute demand" of what any one hyperscaler can offer. "You should expect us to take as much compute as we can," he added. "Our bet is, our demand is going to keep growing, our training needs are going to keep going, and we will spend maybe more aggressively than any company who's ever spent on anything ahead of progress, because we just have this very deep belief in what we're seeing." It's not just OpenAI. All the megacaps are trying to keep up. In their most recent earnings, tech's biggest names all raised capital expenditure guidance to keep pace with AI demand: Microsoft is now targeting $120 billion in full-year capital expenditures, Amazon is topping $100 billion, Alphabet raised its forecast to $85 billion, and Meta lifted the high end of its capex range to $72 billion. Wedbush's Dan Ives said Monday on CNBC's "Closing Bell" that demand for AI infrastructure has grown 30% to 40% in the last months, calling the capex surge a validation moment for the sector. Ives acknowledged "some froth" in parts of the market, but said the AI revolution with autonomous is only starting to play out and we are in the "second inning of a nine-inning game." "The actual impact over the medium and long term is actually being underestimated," he said. Citi's Rob Rowe, speaking Monday on CNBC's "Money Movers," pushed back on comparisons between today's AI boom and the dotcom bubble. "Back then, you had a lot of over-leveraged situations. You didn't have a lot of companies that had earnings," Rowe said. "Here you're talking about companies that have very solid earnings, very strong cash flow, and they're funding a lot of this growth through that cash flow. So in many respects, it's a little different than that." He added that the current wave of AI investment is being driven by structural shifts in the global economy, particularly the rapid growth of digital services, which now account for a large share of global exports. Also unlike the dotcom cycle of the late 90s, companies today are funding their infrastructure spending with strong cash flow rather than relying on debt. Still, concerns about overheating have been mounting. Alibaba co-founder Joe Tsai pointed to worrying signs in the AI sector well before the hyperscalers raised their annual capex guidance during the latest earnings prints. In March, he warned of a brewing AI bubble in the U.S. Speaking at HSBC's Global Investment Summit in Hong Kong, Tsai said he was astounded by the scale of datacenter spending under discussion. Tsai questioned whether hundreds of billions in spending is necessary, and flagged concern about companies starting to build datacenters "on spec," without clear demand. Altman, for his part, sees these cycles as part of the natural rhythm of technological progress. The dotcom crash wiped out scores of companies, but still gave rise to the modern internet. He expects AI to follow a similar path: a few high-profile wipeouts, followed by a lasting transformation. "I do think some investors are likely to get very burnt here, and that sucks. And I don't want to minimize that," he said. "But on the whole, it is my belief that... the value created by AI for society will be tremendous."
