Will IBM's Growing AI Prowess Deliver Sustainable Growth?
International Business Machines Corporation IBM has positioned itself as a major player in the expanding AI landscape worldwide. Its breakthrough innovations, hybrid cloud and AI are utilized by clients across 175 countries to streamline business processes, optimize cost and gain a competitive edge. The company boasts a vast client base across multiple industries, including financial services, telecommunications, healthcare, retail and more.
IBM recently introduced the industry's first integrated software that combines its industry-leading AI security and AI governance. IBM watsonx.governance is a well-known tool that directs, manages and monitors an organization's AI to support responsible, transparent AI use cases. IBM Guardium-AI security secures AI agents and AI models, facilitating trustworthy AI deployments. Comprehensive AI governance is not automatically equal to security. Hence, IBM has integrated these two traits into a cutting-edge software tool to augment the security posture of enterprises' generative-AI systems.
The company also enhanced the capabilities of the Guardium AI security tool. The new feature, developed in collaboration with AllTrue.ai, detects new AI use cases in cloud environments, code repositories and embedded systems. This ensures greater visibility and protection of an increasingly decentralized AI ecosystem.
IBM is also collaborating with SAP to tap generative-AI technology within the retail industry. In collaboration with The All England Lawn Tennis Club, IBM is developing a new fan feature to drive fan engagement during the Wimbledon championships.
Per an IDC report, the global AI market, which was $235 billion in 2024, is expected to reach $631 billion by 2028 with a compound annual growth rate of 27%. With a strong focus on innovation combined with strategic collaborations with key industry leaders in specific sectors, IBM is poised to gain from this emerging market trend.
How Are Competitors Faring?
IBM faces stiff competition in most of its markets. Microsoft Corporation MSFT is accelerating generative-AI development with its extended partnership with OpenAI. With Azure AI, Microsoft is building out the app server for the AI wave, providing access to the most diverse selection of models to meet customers' unique cost, latency and design considerations. The company has more than 60,000 Azure AI customers. Microsoft copilot is also gaining solid market traction as companies are rushing to boost the productivity of internal processes, leveraging AI.
Amazon.com AMZN has developed its own generative-AI platform called Amazon Bedrock. The platform offers a streamlined way to build and scale generative-AI applications with foundational models from AI21 Labs, Anthropic, Cohere, DeepSeek, Luma, Meta, Mistral AI and others. Amazon Bedrock offers comprehensive data protection and privacy. Moreover, the Amazon Bedrock Guardrails offer configurable safeguards that ensure responsible and trustworthy AI deployments. Its cutting-edge capabilities with flexibility and scale can challenge IBM in the AI domain.
IBM's Price Performance, Valuation and Estimates
IBM has surged 60.6% over the past year compared with the industry 's growth of 5.8%.
Image Source: Zacks Investment Research
Going by the price/earnings ratio, IBM's shares currently trade at 24.9 forward earnings, above the industry's value 21.74.
The Zacks Consensus Estimate for IBM's earnings for 2025 has risen over the past 60 days.
Image Source: Zacks Investment Research
IBM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners Up
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