The era of Web 1.0 and Web 2.0 refers to the history of the World Wide Web in the 1990s and early 2000s, which gave rise to the term Internet. In the mid-1990s, the introduction of web browsers such as Netscape Navigator flourished in the era of Web 1.0. While Web 1.0 mostly had static and bland webpages, they were later replaced by Web 2.0's interactivity, social connectivity, and user-generated content.
Web 3.0 has emerged as a new iteration of the World Wide Web, which is based on blockchain technology and bears features like decentralization, openness, and greater user utility. The concept of Web 3.0 is gathering momentum by integrating technologies such as Artificial Intelligence and Machine Learning, or the semantic web system.
International Business Machines Corporation (IBM), Microsoft Corporation (MSFT), and Intel Corporation (INTC) look well-positioned to benefit from the next generation of the Internet. Therefore, we think their stock could be solid bets now.
International Business Machines Corporation (IBM)
IBM in Armonk, N.Y., provides integrated solutions and services worldwide and operates through four business segments: Software that provides a hybrid cloud platform; Consulting that offers business transformation; Infrastructure services that provide on-premises and cloud-based server and storage solutions; and Financing provides lease, installment payment, loan financing.
Last month, IBM Consulting announced that it was working with Discover Financial Services (DFS) to assist the leading digital bank and payments company in improving its digital transformation of applications and existing systems to a hybrid cloud architecture using Red Hat OpenShift. "Consumers demand faster access to integrated digital banking and payments more than ever, with the assurance that their data will be protected," said John Granger, Senior Vice President, IBM Consulting.
Also, last month, IBM announced new solutions with IT management software company, Flexera, and IBM Turbonomic Application Resource Management (ARM) to help the organizations use automation to streamline IT asset management. These new solutions are focused on helping lower the cost of businesses and automating the increasingly difficult task of software license compliance and optimization.
During the first quarter, ending March 31, 2022, IBM's total revenue increased 7.7% year-over-year to $14.20 billion. Its non-GAAP gross profit increased 4.4% year-over-year to $7.52 billion, while its non-GAAP income from continuing operations amounted to $1.27 million, up 25.5% from its prior-year quarter. The company's non-GAAP EPS improved 25% year-over-year to $1.40.
The $3.74 consensus EPS estimate for the fourth quarter ending Dec. 31, 2022, represents 11.5% year-over-year growth. Analysts expect its revenue to increase 4% year-over-year to $17.4 billion for the same period. In addition, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in all the trailing four quarters. The stock has gained 4.6% in price year-to-date and 14.1% over the past six months.
IBM's POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock also has a B grade for Value and Quality. Within the Technology - Services Industry, it is ranked #23 of 81 stocks.
To see additional POWR Ratings for Growth, Sentiment, Stability, and Momentum for IBM, click here.
Microsoft Corporation (MSFT)
MSFT in Redmond, Wash., develops, licenses, and supports software, services, devices, and solutions worldwide. The company has two segments– Productivity and Business Processes, which offers Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance; and Skype for Business, as well as related Client Access Licenses (CAL); Skype, Outlook.com, OneDrive, and LinkedIn; and Dynamics 365, a set of cloud-based and on-premises business solutions for organizations and enterprise divisions.
Last month, MSFT announced advancements in cloud technologies for healthcare and life sciences with the general availability of Azure Health Data Services and updates to Microsoft Cloud for Healthcare. Together with the recent close of its acquisition of Nuance Communications, Microsoft is well-positioned to expand an organization's ability to help others by leveraging trusted AI to address the biggest challenges transforming the future of healthcare for all. Nuance Communications Inc. (NUAN), is a leading conversational AI and ambient intelligence provider across industries, including healthcare, financial services, retail, and telecommunications. With a common vision to build outcomes by AI, Microsoft and Nuance will enable organizations across industries to speed up their business goals with security-focused, cloud-based solutions infused with powerful, vertically optimized AI.
During its second fiscal quarter, ended Dec. 31, 2021, MSFT's total revenue increased 20.1% year-over-year to $51.73 billion. The operating income grew 24.3% from its year-ago value to $22.25 billion, while its net income improved 21.4% from its prior-year quarter to $18.77 billion. The company's EPS rose 22.2% year-over-year to $2.48.
Analysts expect MSFT's revenue to increase 17.6% year-over-year to $49.05 billion for its third quarter, ending March 31, 2022. The company's EPS is expected to grow 12.7% year-over-year to $2.20 in the third quarter, ending March 31, 2022. Furthermore, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters. The company's shares have soared 7.8% in price over the past year.
MSFT's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Sentiment and a B for Quality and Stability. Within the Software – Business industry, it is ranked #8 of 59 stocks.
In total, we rate MSFT on eight distinct levels. Beyond what we have stated above, we have also given MSFT grades for Growth, Value, and Momentum. Get all the MSFT ratings here.
Note that MSFT is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Click here to check out our Software Industry Report for 2022
Intel Corporation (INTC)
INTC designs, manufactures, and sells computer products and technologies internationally and operates through CCG; DCG; IOTG; Mobileye; NSG; PSG; and All Other segments. The Santa Clara, Calif.-based concern provides platform products, such as central processing units and chipsets, and non-platform or adjacent products, including accelerators, boards and systems, connectivity products, graphics, and memory and storage products.
This month, Lockheed Martin Corporation (LMT) and INTC announced that they are leveraging their expertise in technology and communications to bring together innovative 5G-capable solutions allowing faster and more decisive actions for 21st-century security. A memorandum of understanding (MOU) signed late last year amplifies the ongoing strategic relationship between the two companies to align 5G-enabled hardware and software solutions for the Department of Defense (DOD).
In the fourth quarter, ended Dec. 25, 2021, INTC’s non-GAAP net revenue increased 3.5% year-over-year to $19.53 billion. Its non-GAAP operating income amounted to $5.05 billion, while its net income came in at $4.45 billion. The company's non-GAAP EPS amounted to $1.09.
The $3.16 consensus EPS estimate for its fiscal 2023 represents 4.9% year-over-year growth. Analysts expect INTC’s revenue to increase 1.3% year-over-year to $75.71 billion in its fiscal 2022. In addition, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
It is no surprise that INTC has an overall A rating, which equates to Strong Buy in our POWR Ratings system. INTC has a B grade for Value, Sentiment, and Quality. In the Semiconductor & Wireless Chip industry, it is ranked #9 of 96 stocks
Click here to see the additional POWR Ratings for INTC (Growth, Momentum, and Stability).
Click here to checkout our Semiconductor Industry Report for 2022
IBM shares were trading at $138.59 per share on Friday morning, down $1.26 (-0.90%). Year-to-date, IBM has gained 4.94%, versus a -8.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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