If someone mentions tech stocks in the year 2024, you’re likely to think of names from the Magnificent Seven: Apple. Microsoft. Google. Nvidia. These are the major players of today, and most investors either hold their stocks or wish they did.
Go back to the ’80s, and most of those names either didn’t exist yet or had yet to reach the highs that made them legends. One that’s well-known from that era, however, is making a major comeback: IBM, known for spearheading the personal computer market with its IBM PC.
Related: IBM highlights the actual promise of AI (not ChatGPT)
In its earnings call on Jan. 24, IBM (IBM) – Get Free Report had glowing news to report: the company beat fourth-quarter earnings thanks in part to the AI boom, reporting a 3% revenue growth with earnings of $61.9 billion and net income of $7.51 billion. It also reported $11.2 billion of free cash flow for the year.
The software segment was the 113-year-old company’s primary driver, which contributed 43% of total revenue ($26.3 billion).
Arvind Krishna, IBM chairman and chief executive, said he expects a revenue growth in the mid-single digits for 2024, as well as generating $12 billion in free cash flow.
Krishna also attributed a key part of its success to the growing popularity of AI.
“Client demand for AI is accelerating and our book of business for Watsonx and generative AI roughly doubled from the third to the fourth quarter,” he said.
A number of Wall Street analysts upped their projections for IBM stock after earnings were announced. The stock price closed at $188.06 Jan. 25, a high the likes of which the company hasn’t seen since 2013.
Why IBM is well-poised for the future of AI
With IBM’s long history of technology development, the company brings a formidable encyclopedia of knowledge to the table when it comes to how to properly use AI.
Another strength IBM holds is its flagship AI platform, watsonx, which is a highly affordable solution compared to many of the others available to businesses in the current market.
IBM also wants to play a part in the way AI develops in the future. It announced a collaboration with Meta in Dec. 2023 called the AI Alliance, which is described as “an international coalition of corporations, universities and organizations that are collectively committed to “open science” and “open technologies.” Alongside Meta and IBM, the organization also includes AMD, Cornell University, Harvard University, Yale University, NASA, Hugging Face and Intel.
Related: Meta and IBM team up against dominant Big Tech players
The Alliance aims to establish both a governing board and a technical oversight committee and to partner with government and non-profit initiatives.
