American technology company, 115 years old, and a master of serial reinvention. In the mid-1990s the mainframe pioneer rescued itself from collapse by shifting its focus to IT services. In the mid-2000s it sold its struggling PC division to China's Lenovo.
In 2019 IBM acquired Red Hat, a platform that helps companies manage workloads across data centres. Rather than competing with Amazon, Google and Microsoft in the public cloud, IBM created a layer that makes it easier to mix and match among the hyperscalers while continuing to use on-premise mainframes or dedicated private clouds for sensitive tasks. Deals in 2024 and 2025 to buy HashiCorp and Confluent, two more software firms, solidified IBM's role as an orchestrator of hybrid clouds.
IBM has long dabbled in AI—it used the technology to beat Gary Kasparov, the world chess champion, in 1997—but missed the latest wave of large language models. Rather than trying to beat OpenAI and other model-makers, it released a series of small language models under the name Granite, tailored to business applications and requiring less computing power. These and other open-weight models are accessible through its watsonx platform, which enterprises can use to build AI agents trained on their own data. IBM has booked over $10bn-worth of consulting contracts related to generative AI since mid-2023.
In 2021 IBM spun off its struggling outsourcing business, now called Kyndryl, which at the time accounted for about a quarter of its workforce. That left a smaller consulting division focused on technical expertise, which has come in handy as clients grapple with AI. The division's boss has described its evolution as moving to "service as a software".
IBM is still by far the world leader in mainframes. The z17, released in 2025, offers access to the Spyre chip, designed for running AI models. IBM is also at the leading edge of quantum computing. McKinsey reckons the market for quantum technology could reach nearly $100bn by 2035. IBM thinks it can capture about 20% by selling machines and renting out capacity. It hopes to deliver Starling, a "fault-tolerant" quantum computer that can spot and correct the errors the technology is prone to, by 2029.
During the 2010s IBM's business was disrupted by cloud computing, which undermined mainframe sales and the work of servicing them, while low-cost Indian outsourcers pinched share. Revenues and margins shrank. Over the past three years IBM's share price has more than doubled. As a multiple of net profits, it is now valued similarly to Microsoft and other software champions. In 2025 its revenue and net profit rose by 8% and 14% respectively.
In February 2026 IBM's share price slumped by 13% in a single day amid a broader panic about AI's potential to disrupt business models.
Computers are useless. They can only give you answers.