IBM defeated all its huge-cap tech counterparts in 2022 as investors ignored change for security

IBM is seldom described as a hot party. But in a year that experience investors abandoning all-important tech stocks, Big Blue was in the green.

The Nasdaq is shutting down its worst year before 2008. High gas prices, which zoomed inflation and the Federal Reserve’s steady rate increases, have punished growth stocks and favoured more mature, less volatile names that are more recession-resistant.

Tech names that thrived in the Covid days suffered the more as the economy reopened and consumers came back to many of their old habits.

Among U.S. tech firms valued at $50 billion or more, IBM is the only two to generate positive returns in 2022. The other gainer is VMware, up 5% because it agreed in May to be required by Broadcom for $61 billion. As of Friday’s close, the stock was increased by 6% for the year.

While Meta, Amazon and Tesla have been punched, investors turned to 111-year-old IBM, which bets on its stable earnings, alongside energy stocks like Exxon Mobile, health-care names including Merck and industrials Northrop Grumman and Lockheed Martin.

IBM is “trading above its historical range,” Bernstein Research analysts wrote in a December 20 note to clients. The company has a hold rating on the stock.

Nobody is making the mistake of IBM for a growth stock. Expansion is in the single digits, and the previous year the company spun off Kyndryl, its looking infrastructure services business, into a different publicly traded entity. That cut the headcount by about 90,000.

But IBM generated $752 million in unrestricted cash flow in the quarter, up 25% before a year, and paid out $1.5 billion in dividends. Third-quarter earnings and revenue topped estimates, and the company raised its forecast for the entire year.

Crawford Investment Counsel in Atlanta, focusing on income and dividends, wanting at IBM in 2016 and completed that it would be too early for a significant investment, said Aaron Foresman, an equity analyst at the firm.