Cramer: IBM is just another company that has been 'Amazoned'

Key Points
  • IBM's struggles are "just another Amazon story in some ways," Jim Cramer says.
  • The company faces stiff competition from Amazon and others in the cloud and artificial intelligence space, he says.
IBM being 'burned' by its legacy business as it attempts cloud entry: Jim Cramer

Investors should give IBM the benefit of the doubt as it transitions from its old business model, CNBC's Jim Cramer said Wednesday.

Shares of Dow component IBM were 4 percent lower on Wednesday after the iconic tech firm reported its 21st-straight quarter of revenue decline.

But Cramer said many on Wall Street are misguided on how fast IBM has to change, especially when it faces stiff competition.

"This is just another Amazon story in some ways," he said on "Squawk on the Street." "It is just another company that has been 'Amazoned.'"

IBM has struggled during the past five years to grow revenues as it transitions from traditional business tools, like mainframes, to new fields like artificial intelligence, cybersecurity and cloud.

The company faces competition from Amazon Web Services, the world's biggest cloud business. Amazon CEO Jeff Bezos said earlier this year his company plans to embrace artificial intelligence to fuel its businesses. Wall Street has also been abuzz about Amazon after it announced its plan to buy Whole Foods, and what that means for the grocery and meal-kit delivery industry.

Regarding IBM's growth, Cramer said a lot of the initiatives the company is doing have not "kicked in yet, so the stock has not kicked in yet." He added, "IBM is really burdened by the old business. And the new business — they're up against these amazing companies."

"It takes so long to remake an organization when you're up against Amazon, when you're up against [Google-parent] Alphabet, when you're up against Microsoft. These are competitors the likes of which IBM has never seen before," he said.