The tech giant is taking a different path than its peers.
For a technology company to survive more than a century, it must continually reinvent itself. IBM (IBM 1.92%) has faced multiple crises over its long history, and each time, the company ultimately found its footing through transformation.
In the 1990s, the former CEO Lou Gerstner rebuilt IBM’s culture and oriented the company toward services, away from hardware. Over the past decade, cloud computing posed a significant threat to IBM, prompting the company to undertake a new transformation to become a leader in hybrid cloud computing.
Today, artificial intelligence disrupting industries and putting all tech companies on notice. IBM was slow to find a viable business model in the AI era, but the company has adopted a winning strategy in 2025 and is now well-positioned to thrive.
Image source: Getty Images.
Focus on results for business clients
You won’t see IBM investing unprecedented amounts of capital in AI data centers or splurging on cutting-edge AI models. In fact, IBM CEO Arvind Krishna questioned whether the billions of dollars invested in A.I. data centers will always produce a positive return on investment.
Despite this skepticism, IBM is still betting big on AI. The company’s strategy, however, differs significantly from that of most of its peers. IBM is focused on providing AI solutions to its enterprise clients with clear returns on investment. In the same interview where Krishna questioned industry-wide AI data center spending, he predicted that AI would eventually unlock billions of dollars of productivity in the enterprise.
Helping businesses unlock that productivity is the game IBM has chosen to play, and so far, that strategy is working. Through a combination of consulting and software services, IBM has won $9.5 billion in AI-related contracts. The company even improved its full-year outlook in October, thanks in part to the strength of its AI business.
Companies that try to build AI solutions in-house often stumble, according to an MIT study. According to the study, around 95% of AI pilot projects fail to produce significant results. However, the success rate is much higher when companies partner with AI providers. IBM offers a clear value proposition, and with almost every major company and organization at least experimenting with AI, the market opportunity is enormous.
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Today’s change
(-1.92%) $-5.81
Current price
$296.24
Key Data Points
Market capitalization
$277 billion
Daily scope
$295.92 -$302.36
52 week range
$214.50 -$324.90
Volume
124 KB
Average flight
4.8 million
Gross margin
57.22%
Dividend yield
2.27%
It’s not too late to buy IBM stock
IBM shares have surged in 2025, but the tech giant still appears to be a solid investment. While the company expects to generate approximately $14 billion in free cash flow for the full year, the stock trades at just over 20 times free cash flow. It’s not a bargain, but given the growth potential of IBM’s AI business, it’s a reasonable price to pay.