AST SpaceMobile vs. IBM: Which Tech Stock is the Better Buy Now?

Let us delve a little deeper into the companies’ competitive dynamics to understand which of the two is relatively better placed in the industry.

The Case for AST SpaceMobile

AST SpaceMobile is reportedly on track to deploy approximately 45 BlueBird satellites in orbit by early 2027. The company has already deployed 13 commercial satellites (dubbed BlueBird) in LEO, marking a key advancement in developing a space-based mobile network infrastructure. BlueBird 14, 15 and 16 satellites are currently prepared and scheduled to ship for launch, while BlueBird satellites 17 through 46 are in various stages of production and assembly. Utilizing large phased array antennas measuring approximately 2,400 square feet, AST SpaceMobile's technology is backed by more than 3,800 patents and patent-pending claims. This design aims to deliver global cellular coverage by eliminating dead zones and providing space-based connectivity to areas without broadband service. 

The SpaceMobile service is compatible with all major brands available in the market and connects directly to everyday mobile phones. It delivers broadband connectivity from space to unmodified mobile devices, providing a service to fill cellular coverage gaps in a differentiated approach compared to other space-based communication services. AST SpaceMobile has partnered with leading carriers such as AT&T Inc. T and Verizon Communications Inc. VZ to tap into a pre-existing pool of cell customers and raise funds to help build a worldwide satellite network. This has enhanced cellular coverage in the United States, essentially eliminating dead zones and empowering remote areas of the country with space-based connectivity.

However, elevated spending has overshadowed the company’s progress in satellite deployment and commercial partnerships. Unfavorable macroeconomic conditions, including rising inflation, higher interest rates, capital market volatility and geopolitical conflicts, have adversely impacted the company’s operations. These have led to continued fluctuations in satellite material prices, resulting in increased capital costs and pressure on the company’s financial performance. In addition, AST SpaceMobile faces severe competition from existing and new industry leaders like SpaceX’s Starlink and Globalstar, which are developing satellite communications technology using LEO constellations. To combat such competitive pressure, ASTS has to continuously customize its network offerings, enhance the cost-effectiveness of its products and services and boost the satellite data networks, which increases operating costs and reduces margins.

The Case for IBM

IBM is poised to benefit from healthy demand trends for hybrid cloud and AI, which drive the Software and Consulting segments. The company’s growth is expected to be aided by analytics, cloud computing and security in the long term. With a surge in traditional cloud-native workloads and associated applications, along with a rise in generative AI deployment, there is a radical expansion in the number of cloud workloads that enterprises are currently managing. This has resulted in heterogeneous, dynamic and complex infrastructure strategies, which have led firms to undertake a cloud-agnostic and interoperable approach to highly secure multi-cloud management, translating into a healthy demand for IBM hybrid cloud solutions. 

In addition, the buyout of HashiCorp has significantly augmented IBM’s capabilities to assist enterprises in managing complex cloud environments. HashiCorp’s tool sets complement IBM Red Hat’s portfolio, bringing additional functionalities for cloud infrastructure management and bolstering its hybrid multi-cloud approach.

Despite solid hybrid cloud and AI traction, IBM is facing stiff competition from Amazon’s AWS and Microsoft Corporation’s MSFT Azure. Increasing pricing pressure is eroding margins, and profitability has trended down over the years, barring occasional spikes. The company faces a potent threat from AI firm Anthropic as the latter’s Claude Code tool can modernize legacy COBOL systems – a foundational programming language deeply embedded in IBM’s mainframe ecosystem. With Claude Code proposing to substantially automate code exploration, documentation, refactoring and security analysis, it threatens to reduce enterprises’ reliance on specialized legacy service providers like IBM, bringing its sustenance at stake.

How Do Zacks Estimates Compare for ASTS & IBM?

The Zacks Consensus Estimate for AST SpaceMobile’s 2026 sales implies year-over-year growth of 129.5%, while that of EPS suggests a decline of 63.4%. The EPS estimates have been lowered 48% over the past 60 days.

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The Zacks Consensus Estimate for IBM’s 2026 sales indicates year-over-year growth of 4.4%, while that for EPS suggests an improvement of 6.4%. The EPS estimates have trended down 0.2% over the past 60 days.

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Price Performance & Valuation of ASTS & IBM

Over the past year, AST SpaceMobile has gained 48.8% compared with the industry’s growth of 38.7%. IBM has declined 1% over the same period.

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IBM looks more attractive than AST SpaceMobile from a valuation standpoint. Going by the price/sales ratio, IBM’s shares currently trade at 3.08 forward sales, significantly lower than AST SpaceMobile’s 55.85.

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ASTS or IBM: Which is a Better Pick?

Both AST SpaceMobile and IBM carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Both companies expect their sales to improve in 2026. However, ASTS’ earnings are likely to decline significantly, while IBM’s bottom line is expected to witness modest growth. IBM has shown relatively steady revenue growth for years, while AST SpaceMobile has been facing a bumpy road. In terms of price performance, AST SpaceMobile has outperformed IBM but is trading expensively compared to the latter in terms of the valuation metric. With improved estimate revisions, IBM is relatively better placed than AST SpaceMobile and seems to be a better investment option at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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