Everyone’s chasing Nvidia, but IBM is quietly making real money from AI
As investors chase the biggest winners of the artificial intelligence boom, attention has largely centered on chipmakers and data center operators.
IBM (IBM) has taken a different path, generating steadier, if less headline-grabbing, gains by focusing on how companies utilize AI within their existing IT systems, rather than on selling the hardware that powers it.
While companies such as Nvidia (NVDA) have benefited from the rising demand for AI infrastructure, including graphics processing units and accelerators, IBM focuses on longer-term contracts and recurring revenue.
IBM highlighted this trend in its third-quarter earnings report, stating that its AI book of business reached $9.5 billion, a figure representing signed deals and active client engagements related to AI across its portfolio.
The company said much of this demand is coming from companies integrating AI into their core operations, rather than experimenting with early-stage pilots.
“AI adoption is accelerating, and hybrid cloud remains the foundation of enterprise IT,” IBM president and CEO Arvind Krishna said during the company’s earnings call.
IBM’s consulting business, which has faced broader industry headwinds as companies rein in discretionary spending, has remained an important channel for AI-related work.
The company has focused its consulting efforts on implementation, systems integration, and governance — areas that are often necessary for regulated industries such as financial services, healthcare, and government, and that tend to produce longer-duration engagements.
While IBM has not captured headlines for its AI efforts, the business is generating tangible results that are increasingly reflected in its earnings and share price.
Third-quarter results highlight AI’s growing role
At $9.5 billion, IBM’s AI book of business now represents a meaningful component of the company’s overall operations.
Beyond just AI, the company reported $16.3 billion in total revenue during the third quarter, up 9% year over year and driven by broad gains in software, infrastructure, and consulting.
Net income swung sharply into positive territory, with the company posting $1.7 billion in profit, compared with a $330 million net loss in the year-ago quarter.
While not all segments performed equally — growth in the cloud software business showed signs of slowing — the underlying results reinforced IBM’s narrative as a provider of practical AI solutions.
IBM’s shares have responded, rising more than 6 % since the October earnings release, and the stock is up roughly 36 % year-to-date, outpacing major U.S. indexes.
Long-time shareholders, many of whom have favored IBM for its dividend and relative stability, have also benefited from income returns.
The company’s quarterly payout — recently approved at $1.68 per share — equates to a dividend yield of about 2.2%, above the broader technology sector average and continuing a multidecade record of annual dividend increases.