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Key Takeaways
- IBM shares gained more than 3% on Tuesday and were moving slightly higher in premarket trading Wednesday after the company notified staff that it planned to cut jobs in its marketing and communications division.
- The company is rebalancing its workforce as it prioritizes skills in areas that best meet its customers’ needs, such as artificial intelligence and hybrid cloud.
- IBM shares may find chart resistance near the peak of a triple top pattern, which also doubles as the stock’s all-time high, at $206.22.
Shares in legacy computing giant International Business Machines (IBM) are gaining ground after the company notified employees in its marketing and communications division that it plans to reduce the size of its headcount.
According to a person familiar with the matter, IBM’s chief communications officer Jonathan Adashek announced the job cuts to the unit’s staff in a brief seven minute meeting. The layoffs come less than a year after CEO Arvind Krishna told Bloomberg in an interview that the company expects to pause hiring for roles that could be replaced by artificial intelligence (AI), adding that the technology could replace nearly 8,000 jobs in the coming years, specifically staff in non-customer-facing roles and employees who perform back office functions.
More recently, IBM said that “workforce rebalancing” would affect a small portion of its global workforce as the company prioritizes skills in areas that best meet its customers’ needs.
“In 4Q earnings earlier this year, IBM disclosed a workforce rebalancing charge that would represent a very low single-digit percentage of IBM’s global workforce and we expect to exit 2024 at roughly the same level of employment as we entered with,” a company spokesperson said, according to MarketWatch. “This rebalancing is driven by increases in productivity and our continued push to align our workforce with the skills most in-demand among our clients, especially areas such as AI and hybrid cloud.”
The proposed job reductions at IBM follow in the footsteps of other big tech companies, such as Microsoft (MSFT), Alphabet (GOOGL), and Amazon (AMZN), which have trimmed staffing levels this year amid uncertainties surrounding the macroeconomic environment and increasing competition in the enterprise AI race.
Taking a look at IBM’s weekly chart, the price continues to move higher after consolidating above the top trendline of a rising wedge pattern. If the stock keeps climbing from these levels it’s worth monitoring a triple top pattern that formed between April 2012 and March 2013 as a potential area of resistance. The pattern’s third peak also marks the stock’s all-time high (ATH) at $206.22. A convincing volume-backed breakout above this closely-watched level could open the door to further upside in the months ahead.
IBM shares were up 0.1% at $197.90 in premarket trading Wednesday about three hours before the opening bell. The stock gained 3.2% on Tuesday and has risen more than 50% over the past year.
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