This iconic but outdated tech company is now in the midst of the artificial intelligence revolution and may be better positioned than most of its AI peers.
Most investors looking to capitalize on the artificial intelligence (AI) craze start their search with a household name like Nvidia, Microsoftor Alphabet. And that is understandable. These companies are not only advancing AI technology, but also making more money from it than most other companies.
However, there is one largely overlooked AI outfit that is only now coming into its own and could easily outperform the industry’s most popular choices.
That name? International business machines (IBM 0.98%). You know better than IBM.
Image source: Getty Images.
Yes, That IBM
That’s not a typo. Most people may not realize it, but IBM is heavily involved in artificial intelligence. It’s just there in a way that’s unlike what most people think of when they think of AI.
Chief among these differences is that it doesn’t offer a consumer-facing platform like OpenAI’s ChatGPT or Google’s Gemini. Most tools are built for business purposes, such as automation or AI-powered customer service agents.
The other major difference is the way it provides these solutions. Unlike Nvidia, which focuses largely on processor chips, or Alphabet’s Google, which simply offers cloud-based access to its AI platform, IBM sells and services entire mainframe computers that can handle AI work, giving its customers the flexibility that can only come with owning such equipment.
It’s the business model that makes IBM a good choice
However, it’s not just the powerful hardware that makes IBM an attractive AI prospect. In fact, infrastructure only accounts for about a quarter of total revenue. It’s also what selling these physical platforms does that is so remarkable. See, they also need IBM-coded software to run, and often they also need ongoing IBM-provided consulting work. These two offerings make up another quarter and nearly half of the company’s total revenue, respectively.
While not all of this activity is necessarily AI-related, much of it is, and increasingly so. To date, IBM’s fledgling generative AI offering has generated $12.5 billion in cumulative revenue, most of which came from consulting… a business that now boasts a $32 billion backlog waiting to be booked. Meanwhile, recurring software revenues are now at an annual pace of $23.6 billion, much of which also comes from IBM’s AI efforts.
For perspective, the company reported revenue of $67.5 billion for all of 2025, up 6% from 2024 revenue.
International business machines
Today’s change
(-0.98%)$-2.88
Current price
$291.78
Key data points
Market capitalization
$277 billion
Day range
$290.33 -$297.60
Range of 52 weeks
$214.50 -$324.90
Volume
123K
Avg. full
4.3 million
Gross margin
58.06%
Dividend yield
2.26%
IBM is just waiting for investors to take notice
The key to IBM stock’s market-leading bullishness in 2026 is rooted in the realization driven by results. Most investors may not yet realize how much of this company’s future business is already lined up and simply waiting to be reported. However, as this company continues to report high-margin revenue growth, more and more investors should start liking the company’s razor business model.
This bullishness will be reinforced by the continued introduction of new AI technologies such as Project Bob, which was unveiled late last year. More than just a software coding assistant, ‘Bob’ is an enterprise-level tool that can accept instructions from other AI-powered agents as fluidly as it can from humans, while ensuring that new coding adheres to that company’s security and compliance policies.
