Investors should give IBM the benefit of the doubt as it transitions from its old business model, CNBC’s Jim Cramer said Wednesday.
IBM’s shares were 4 percent lower on Wednesday after the iconic tech company reported its 21-straight quarter of revenue decline. The stock’s fall was set to pressure the price-weighted Dow Jones industrial average.
Cramer said many on Wall Street are misguided on how fast the tech company has to change, especially when it faces stiff competition.
“This is just another Amazon story in some ways. It is just another company that has been ‘Amazoned,'” Cramer said on “Squawk on the Street.”
IBM has struggled during the past five years to grow revenues as it transitions from traditional business tools, like mainframes, to new fields like artificial intelligence, cybersecurity and cloud.
The company faces competition from Amazon Web Services, the world’s biggest cloud business. And Amazon CEO Jeff Bezos said earlier this year his company plans to embrace artificial intelligence to fuel its businesses.
Wall Street has been abuzz about Amazon after it announced its plan to buy Whole Foods, and what that means for the grocery and meal-kit delivery industry.
Regarding IBM’s growth, Cramer said a lot of the initiatives that IBM is doing have not “kicked in yet, so the stock has not kicked in yet.”
“IBM is really burdened by the old business. And the new business — they’re up against these amazing companies,” Cramer said.
“It takes so long to remake an organization when you’re up against Amazon, when you’re up against Alphabet, when you’re up against Microsoft. These are competitors the likes of which IBM has never seen before,” he said.