The tech giant is taking a different path than its peers.
For technology companies to survive beyond a century, they must continually reinvent themselves. IBM (IBM 0.82%) The company has faced many crises over its long history, but each time the company has ultimately found its footing through transformation.
In the 1990s, former CEO Lou Gerstner restructured IBM's culture and shifted the company's focus from hardware to services. Over the past decade, cloud computing has posed a significant threat to IBM, prompting the company to further transform into a leader in hybrid cloud computing.
Today, artificial intelligence is transforming industries and attracting the attention of every technology company. Although IBM was slow to find a viable business model for the AI era, it has established a winning strategy in 2025 and is now well-positioned to grow.
Image source: Getty Images.
Focus on enterprise customer outcomes
IBM won't spend unprecedented amounts on AI data centers or splurge on cutting-edge AI models. In fact, IBM CEO Arvind Krishna doubts whether the trillions of dollars invested in AI data centers will generate a positive return on investment.
Despite this skepticism, IBM is still betting big on AI. However, the company's strategy is very different from that of most of its peers. IBM is focused on providing enterprise customers with AI solutions that deliver a clear return on investment. In the same interview in which he questioned industry-wide AI data center spending, Mr. Krishna predicted that AI would eventually boost enterprise productivity by trillions of dollars.
Helping businesses unlock their productivity is the strategy IBM has chosen, and so far, it's working well. IBM has acquired $9.5 billion worth of AI-related business through a combination of consulting services and software. The company further raised its full-year forecast in October, due in part to the strong performance of its AI business.
Research from MIT shows that companies that try to build AI solutions in-house often stumble. According to this study, approximately 95% of AI pilots fail to generate meaningful profits. However, the success rate is much higher when companies partner with an AI vendor. IBM offers a clear value proposition, nearly every major company and organization is at least experimenting with AI, and the market opportunity is huge.
international business machine
Today's changes
(-0.82%) $-2.52
current price
$303.22
Key data points
Market capitalization
$286 billion
daily range
$303.22 – $306.24
52 week range
$214.50 -$324.90
volume
17K
average volume
4.8M
gross profit
57.22%
dividend yield
2.19%
It's never too late to buy IBM stock
IBM's stock price soared in 2025, but the tech giant still looks like a solid investment. The company expects to generate about $14 billion in free cash flow for the full year, and its stock trades at just over 20 times free cash flow. This isn't a bargain, but given the growth potential of IBM's AI business, it's a reasonable price to pay.
