How sustainable is IBM's gross profit growth trend?

IBM's gross profit growth trend appears to be sustainable for several reasons: 1. **Consistent Historical Performance**: IBM has demonstrated a consistent growth trajectory in gross profit over the past decade. The company's gross profit increased from $35.55 billion in 2010 to $44.4 billion in 2024, with notable increases in 2018 and 2019. |code|Ticker|Name|Date|Gross Profit YoY|market_code| |---|---|---|---|---|---| |IBM|IBM.N|IBM|2024 Q1|3.102943134904781|169| |IBM|IBM.N|IBM|2024 Q2|5.281731560992824|169| |IBM|IBM.N|IBM|2024 Q3|4.94827371307491|169| |IBM|IBM.N|IBM|2024 Q4|1.6752702834323558|169| 2. **Recent Financial Performance**: In Q4 2024, IBM reported a gross profit of $10.44 billion, representing a 1.68% year-over-year growth. This growth was driven by strong demand for hybrid cloud and AI solutions, which are strategic growth areas for the company. 3. **Strategic Focus**: IBM's focus on high-margin software and services, as well as its ability to expand gross margins, supports the sustainability of its profit growth. The company's gross margins have expanded from 37% in 2004 to 49% in 2013, indicating a trend towards higher profitability. 4. **Dividend Sustainability**: IBM's dividend payout ratio is relatively low at 0.85 as of 2023 Q3, suggesting that the company retains a significant portion of its earnings for future growth and can sustain its dividend payments without compromising its financial health. 5. **Positive Analyst Sentiment**: Analysts have projected a compound annual growth rate (CAGR) of 7% for IBM, reflecting confidence in the company's ability to sustain and grow its profit trend over the long term. In conclusion, IBM's gross profit growth trend appears to be sustainable based on the company's historical performance, recent financial results, strategic focus, dividend sustainability, and positive analyst sentiment.