Jim Cramer tells investors that IBM is a “trust but verify” situation.

CNBC’s Jim Cramer on Thursday advised investors to tread carefully if they are debating whether to buy stocks. IBM after the company reported third-quarter earnings.

“Even after today’s nearly 5% gain in IBM stock, the stock is still substantially down from where it traded just a few months ago. I am optimistic…but keep in mind that going forward, the trust-but-verify situation remains,” he said. .

IBM beat revenue and earnings estimates in its third-quarter earnings release on Wednesday and raised its earnings guidance. The enterprise software and consulting company said revenue was up 6.5% year-over-year.

While a strong US dollar is a deterrent for the company, which expects its annual revenue to be 7% less than it could otherwise earn, IBM still reiterated its forecast made earlier this year of about $10 billion. dollars of free cash flow.

“Put it all together and while IBM still has a lot of room for improvement, this quarter was a big step forward for them and a big win for the bulls.” Kremer said.

He added that the company’s spin-off of its Managed Infrastructure Services business at Kyndryl in November 2021 appears to be paying off.

“Remember, IBM went through all that Kyndryl spin-off to be a growing company again, and now they are—they are at peak growth,” he said.