Can IBM's Tie-Up With Cisco for Quantum Network Aid Its Shares?

International Business Machines Corporation IBM has collaborated with Cisco Systems, Inc. CSCO to develop a connected network of fault-tolerant quantum computers by 2030. The companies aim to pool their individual resources and key expertise to create a pathway toward an exponentially large computational space, leading to the formation of a quantum computing Internet. This is likely to create a platform where many distributed quantum-based technologies, such as quantum computers, quantum sensors and quantum communications, are connected to share information across distances.As part of this collaborative effort, IBM intends to develop a quantum networking unit (QNU) to serve as the interface linking several quantum computers to a quantum processing unit (QPU). This will facilitate the conversion of stationary quantum information in the QPU into "flying" quantum information for transfer across potentially multiple quantum computers through a network. Cisco is developing a high-speed software protocol framework that can continuously and dynamically reconfigure network paths to drive the quantum information transfer required for a given quantum algorithm or application. Leveraging Cisco quantum network nodes, various IBM QPUs within a data center are likely to be linked through the QNU interface. This is expected to be extended across multiple data centers to scale a larger quantum network to form the groundwork for a quantum computing Internet. As users seek to achieve quantum advantage — where quantum computers outperform the classical ones — the quantum computing network could pave the way for technological innovations across the quantum ecosystem.IBM Focusing on Quantum ComputingIBM had earlier inked a partnership with Advanced Micro Devices, Inc. AMD to develop scalable, open-source platforms that could redefine the future of computing. Together, the companies aim to develop next-generation computing architectures, known as quantum-centric supercomputing, which enable users to increase the complexity of algorithms in the quantum hardware. IBM has made significant updates to Qiskit, its widely used quantum software platform. The latest version has scaled dynamic circuit capabilities to deliver a 24% increase in accuracy at the scale of 100+ qubits, giving developers more control than ever before. IBM is also extending Qiskit with a new execution model that enables fine-grained control with accelerated error mitigation capabilities that significantly reduce the cost of extracting accurate results.Price PerformanceRiding on such novel initiatives, IBM has surged 35.7% over the past year compared with the industry’s growth of 61.2%, outperforming peers like Amazon.com, Inc. AMZN and Microsoft Corporation MSFT. While Amazon has jumped 10.7%, Microsoft gained 14.1% over this period.Image Source: Zacks Investment ResearchEstimate Revision Trend for IBMIBM is currently witnessing an uptrend in estimate revisions. Earnings estimates for IBM for 2025 have moved up 7.1% to $11.39 over the past year, while the same for 2026 has increased 8.8% to $12.23. The positive estimate revision portrays bullish sentiments about the stock’s growth potential.Image Source: Zacks Investment ResearchIBM Remains Plagued by Margin WoesDespite solid hybrid cloud and AI traction, IBM is facing stiff competition from Amazon Web Services and Microsoft Azure. Increasing pricing pressure is eroding margins and profitability has trended down over the years, barring occasional spikes. The company’s ongoing, heavily time-consuming business model transition to the cloud is a challenging task. Weakness in its traditional business and foreign exchange volatility remains a significant concern.IBM is resorting to massive job cuts to reduce operating costs. A significant part of these jobs is slated to be shifted to India under a “resource action” plan, an ongoing corporate strategy to tap the vast talent pool of the subcontinent at lower operating costs. Although the company spokesperson has refused to comment on the grapevines and commit an exact figure for the layoffs, various unidentified sources have confirmed that the action has already started, impacting employees from consulting, corporate social responsibility, cloud infrastructure, sales and internal systems teams.Image Source: Zacks Investment ResearchEnd NoteWith solid fundamentals and healthy revenue-generating potential driven by robust demand trends, IBM is witnessing a steady growth curve. A strong emphasis on quantum computing, hybrid cloud and an AI focus are driving value for customers. With improving earnings estimates, the stock is witnessing a positive investor perception. However, IBM’s growth is dented by high operating costs and stiff competition that reduce its profitability. With a Zacks Rank #3 (Hold), IBM appears to be treading in the middle of the road, and new investors can be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report International Business Machines Corporation (IBM): Free Stock Analysis Report Cisco Systems, Inc. (CSCO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks