Head-To-Head Review: Applied Digital (NASDAQ:APLD) versus International Business Machines (NYSE:IBM)

International Business Machines (NYSE:IBM) and Applied Digital (NASDAQ:APLD) are both technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, profitability, risk, valuation and earnings.

Profitability

This table compares International Business Machines and Applied Digital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
International Business Machines	15.52%	35.65%	7.54%
Applied Digital	-37.78%	-16.42%	-4.00%

Volatility and Risk

International Business Machines has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500. Comparatively, Applied Digital has a beta of 5.72, suggesting that its share price is 472% more volatile than the S&P 500.

Institutional and Insider Ownership

59.0% of International Business Machines shares are owned by institutional investors. Comparatively, 65.7% of Applied Digital shares are owned by institutional investors. 0.3% of International Business Machines shares are owned by insiders. Comparatively, 9.5% of Applied Digital shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares International Business Machines and Applied Digital”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
International Business Machines	$69.10 billion	3.19	$10.59 billion	$11.27	20.77
Applied Digital	$611.31 million	12.29	-$244.00 million	($0.89)	-28.97

International Business Machines has higher revenue and earnings than Applied Digital. Applied Digital is trading at a lower price-to-earnings ratio than International Business Machines, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for International Business Machines and Applied Digital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
International Business Machines	1	11	16	0	2.54
Applied Digital	2	1	11	3	2.88

International Business Machines currently has a consensus target price of $265.90, indicating a potential upside of 13.61%. Applied Digital has a consensus target price of $68.15, indicating a potential upside of 164.35%. Given Applied Digital’s stronger consensus rating and higher probable upside, analysts clearly believe Applied Digital is more favorable than International Business Machines.

Summary

International Business Machines beats Applied Digital on 8 of the 15 factors compared between the two stocks.

About International Business Machines

International Business Machines Corporation, together with its subsidiaries, provides integrated solutions and services worldwide. The company operates through Software, Consulting, Infrastructure, and Financing segments. The Software segment offers a hybrid cloud and AI platforms that allows clients to realize their digital and AI transformations across the applications, data, and environments in which they operate. The Consulting segment focuses on skills integration for strategy, experience, technology, and operations by domain and industry. The Infrastructure segment provides on-premises and cloud based server, and storage solutions, as well as life-cycle services for hybrid cloud infrastructure deployment. The Financing segment offers client and commercial financing, facilitates IBM clients’ acquisition of hardware, software, and services. The company has a strategic partnership to various companies including hyperscalers, service providers, global system integrators, and software and hardware vendors that includes Adobe, Amazon Web services, Microsoft, Oracle, Salesforce, Samsung Electronics and SAP, and others. The company was formerly known as Computing-Tabulating-Recording Co. International Business Machines Corporation was incorporated in 1911 and is headquartered in Armonk, New York.

About Applied Digital

Applied Digital Corporation designs, develops, and operates datacenters in North America. Its datacenters provide digital infrastructure solutions to the high-performance computing industry. The company also provides artificial intelligence cloud services, high performance computing datacenter hosting, and crypto datacenter hosting services. The company was formerly known as Applied Blockchain, Inc. and changed its name to Applied Digital Corporation in November 2022. Applied Digital Corporation is based in Dallas, Texas.