Shares of IBM (IBM) are trading near record highs, outshining the so-called “Magnificent 7” and signaling that even century-old companies can successfully reinvent themselves.
The 100-year-old tech giant has quietly pivoted into the fast-growing world of artificial intelligence, and investors are taking notice.
IBM’s strong run this year culminated last month with the stock hitting an all-time closing high near $295. Even after a minor pullback, IBM continues to trade above $280 a share.
The stock is up 29% year-to-date, outperforming every member of the Mag 7: Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA).
Over the past 12 months, IBM shares have surged more than 55%.
A key driver behind this rally has been better-than-expected earnings. The company reported $14.54 billion in revenue and earnings of $1.60 per share in the first quarter.
Looking ahead, IBM forecasts second-quarter revenue between $16.4 billion and $16.75 billion, with the midpoint topping analyst expectations.
The company also reaffirmed its 2025 outlook for $13.5 billion in free cash flow.
IBM’s longevity since its early 20th-century origins can largely be credited to its ability to adapt in an ever-evolving tech landscape.
Once best known for its hardware, IBM has transitioned into a software and consulting powerhouse, and now, it’s staking a serious claim in AI, with promising results.
IBM’s pivot into artificial intelligence is paying off
IBM’s push into artificial intelligence has centered on enterprise AI and hybrid cloud solutions, with its Watsonx platform serving as the cornerstone of this strategy.
Watsonx streamlines enterprise AI adoption by providing a unified platform for building, deploying, and managing AI agents.
By the fourth quarter of 2024, IBM’s generative AI business had grown into a $5 billion revenue stream — an increase of roughly $2 billion from the previous quarter.
In an April address to shareholders, CEO Arvind Krishna acknowledged that the operating environment is “rapidly shifting."
At the same time, he emphasized that IBM has stayed ahead of the curve thanks to “the continued success of our focused strategy around hybrid cloud and AI, especially where clients are looking for cost savings.”
Strong results have enabled IBM to double down on its AI investments, including the launch of a $500 million enterprise AI venture fund and a $150 billion commitment to U.S. manufacturing.
IBM is scheduled ot deliver second-quarter earnings on July 23, according to Nasdaq.
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