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IBM Revenues Miss Sends Stock Falling. Hachicorp Acquisition Also In News

Analyst Team trader
Updated 25 Apr 2024

Markets react poorly to the IBM earnings, and acquisition of Hashicorp, with shares trading sharply down today. In the earnings announcement late Wednesday, the firm reported adjusted earnings of $1.68 per share for the quarter ending in March surpassed the analyst consensus of $1.60 per share. With revenues falling short of the expected $14.53 billion anticipated by analysts ($14.46 billion) this was a quarter that missed the mark.

Elsewhere in IBM news, a decisive move to enhance its cloud software prowess was made with news the acquisition of multi-cloud infrastructure automation company HashiCorp for $6.4 billion. The deal, which translates to$35 per share in cash, represents a significant step for IBM in expanding its strategic growth areas in the rapidly evolving cloud industry and putting themselves in the forefront of the tech sector.

Midway through the trading session, IBM (NYSE: IBM) shares are down by approximately 8.78% and HashiCorp (NASDAQ: HCP) are up by 5.01%, $2 below that $35 level. It seems at first glance at least that news of the acquisition has markets favouring HCP on the deal.

Founded on the principle of simplifying complex cloud infrastructures, HashiCorp has carved out a niche for itself with leading-edge solutions that facilitate the management of multi-cloud and hybrid cloud environments efficiently. This acquisition is expected to unlock considerable value for IBM, by driving synergies across its pivotal growth dimensions, particularly given the corporation's vast expertise and standing in the hybrid cloud domain.

IBM Chairman and CEO Arvind Krishna underscored the significance of this development. He pointed to the intricate challenges enterprise clients face as they grapple with managing sprawling infrastructures and applications dispersed across varied cloud ecosystems. Krishna's vision is clear: IBM aims to become an essential partner for organisations as they negotiate the complexity presented by multi-cloud adoption.

The sentiment is echoed by HashiCorp's co-founder and CTO, Armon Dadgar. In a dynamic technological landscape, where effective management and automation are key to leveraging multi-cloud and hybrid cloud environments, HashiCorp's capabilities emerge as more critical than ever. Dadgar illustrates how their tools are fine-tuned to address these pressing needs within the industry, aligning perfectly with IBM’s value proposition.


HashiCorp CEO Dave McJannet expressed enthusiasm over the merger, highlighting the accelerated trajectory it presents for HashiCorp's mission. Joining forces with a titan like IBM is not only a testament to HashiCorp’s success but also an opportunity to amplify their impact within cloud computing.

A driving force behind this strategic move is the growing dominance of cloud-native workloads and the rise of generative artificial intelligence (AI) deployments, which are rapidly expanding the volume and variety of cloud workloads managed by enterprises. As these technologies become increasingly ubiquitous, the imperative to effectively coordinate and scale operations in the cloud intensifies.

McJannet attributes IBM's leadership in hybrid cloud and its relentless pursuit of innovation as the qualities that make IBM an ideal home for HashiCorp. With this acquisition, IBM is not only signalling its commitment to maintaining a competitive edge in cloud technologies but is also equipping itself to push the frontier of what such services can offer enterprises worldwide.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.