IBM (IBM) has plenty to prove in its fourth-quarter earnings report, but if Big Blue can meet Wall Street's high expectations, it may finally be on track to complete a long-awaited turnaround. 

The software giant, set to report after Thursday's closing bell, is expected to post adjusted earnings of $5.17 per share and $22.04 billion in revenue. Shares of IBM were rising 0.5% to $169.40 on Thursday morning. The stock is down 2.4% over the last 12 months, compared to the Nasdaq's 31.4% rise over the same time period.

Here are three key things investors will be watching for: 

1. Signs that it's truly turning the corner.

IBM's quarterly revenue has declined year-over-year for 23 consecutive quarters, as several of its mainstay businesses continue to sag and competition in high-growth areas such as cloud computing increases. Wall Street has continued to wait for signs that IBM can execute a reboot of several key businesses, including its hardware and strategic imperatives segments.

"While it's been an arduous, never ending turnaround story at IBM with patience wearing thin among investors, the combination of massive cost cutting, a myriad of sales force changes, significant investments in AI, and focus on driving big data, cloud, and analytics sales is starting to...help the company slowly start to turn the corner," said GBH Insights analyst Daniel Ives.

Still, Ives cautioned that a turnaround isn't a given in 2018, as the company has yet to prove that it can successfully shift to a next-generation software business and faces "massive competition" from all angles. Additionally, legacy hardware headwinds "remain the anchor on the ship," Ives said.

Bernstein analyst Toni Sacconaghi said it remains unclear whether IBM's outperforming third-quarter results indicate a "secular inflection" in the business, or if they were just a "one-time lift" from mainframe sales. IBM began shipping its z14 mainframe in September, which is what gave its software segment a boost in the third quarter, thanks to a refreshed upgrade cycle. 

"If software performance regresses (suggesting that Q3 was merely a pull-forward), IBM's stock will likely underperform," Sacconaghi said. "Moreover, if IBM guides below consensus on fiscal 2018 earnings per share and/or free cash flow (or if investors believe 2018 results will be inflated by discrete items), we believe recent positive sentiment is also likely to become deflated."

2. How its high-growth businesses are doing.

IBM's Strategic Imperatives unit continues to be a bright spot for the company as other businesses continue to post revenue declines. The segment, which encompasses its cloud, Watson, analytics, security and other software, currently makes up 43% of IBM's total revenues and is growing in the double digits. Specifically, cloud revenue grew 20% year-over-year to $4.1 billion during the most recent quarter. 

It's no surprise, then, that Wall Street analysts view the Strategic Imperatives business as a key element to IBM's overall turnaround. IBM has so far invested about $40 billion in "digital" areas that contribute to Strategic Imperatives, while acquiring more than 55 companies to build out its cloud and cognitive platforms, said CFRA Research analyst David Holt.

"Strategic Imperatives remain the anchor to the recovery," Holt added.

Barclays analysts believe IBM could eventually rank alongside Amazon (AMZN) and Microsoft (MSFT) as one of the top cloud vendors, as enterprise firms "seek a multi-cloud strategy." Strategic Imperatives revenues may soon surpass legacy revenue, which could signal that "the worst may be over," the firm added. 

3. What IBM's results foretell for other companies' earnings.

Big Blue's fourth-quarter results will likely help serve as a blueprint for how the upcoming earnings season will shake out for a variety of other software, analytics, security and cloud companies. It will also indicate how broader enterprise tech spending trends may fare during the quarter, Ives said. 

Tech giants such as Cisco Systems Inc. (CSCO) , which reports second-quarter results on Feb. 14, greatly depend on enterprise IT spending. Microsoft, which is set to report on Jan. 31, will get a lift from enterprise cloud spending, as will Hewlett Packard Enterprise (HPE)  from IT spending. HPE reports its first-quarter earnings on March 1.

Microsoft is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells MSFT? Learn more now.

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