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

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

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Applied Digital	$611.31 million	12.60	-$244.00 million	($0.89)	-29.69
International Business Machines	$67.53 billion	3.39	$10.59 billion	$11.27	21.57

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 Recommendations

This is a summary of current ratings and price targets for Applied Digital and International Business Machines, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Digital	2	1	11	3	2.88
International Business Machines	1	10	17	0	2.57

Applied Digital currently has a consensus price target of $68.15, indicating a potential upside of 157.95%. International Business Machines has a consensus price target of $265.90, indicating a potential upside of 9.36%. Given Applied Digital’s stronger consensus rating and higher possible upside, analysts clearly believe Applied Digital is more favorable than International Business Machines.

Insider and Institutional Ownership

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

Profitability

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

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

Risk & Volatility

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

Summary

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

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.

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.