IBM’s Quiet Ascent: How Steady Transformation Is Delivering Market Gains

While much of the tech world remains fixated on chipmakers like Nvidia, International Business Machines Corp. (IBM) has been methodically executing a strategic overhaul with impressive results. The company's shares have climbed 45% since the start of the year, a performance that now surpasses many of its more hyped competitors. This resurgence is being fueled by the dual engines of artificial intelligence and cloud services, raising the question of whether this established tech giant can maintain its current momentum.

The third quarter of 2025 proved to be a decisive period for IBM, with the company reporting financial figures that comfortably exceeded market expectations. Revenue reached $16.3 billion, showing significant expansion. Even more notably, the adjusted earnings per share came in at $2.65, beating analyst forecasts which had been set at $2.45. In response to this robust performance, management has raised its full-year outlook, now projecting revenue growth exceeding 5 percent.

WatsonX: The Engine of Growth

At the core of IBM's rally is its rapidly expanding artificial intelligence division. The generative AI platform, WatsonX, is generating substantial interest among enterprise clients. Contract volumes tell a compelling story, surging from $6 billion in May to over $7.5 billion by July—a pace of growth that has surprised even the most optimistic industry observers.

Key performance indicators supporting this growth include:
* A quarterly year-over-year revenue increase of 9.1 percent
* An upward revision to the free cash flow forecast, now set at $14 billion
* The strategic acquisition of Txture in October, which significantly bolsters the company's cloud capabilities

Should investors sell immediately? Or is it worth buying IBM?

A Deliberate Corporate Restructuring

Looking ahead to the fourth quarter, IBM has announced workforce reductions, a move that might initially appear contradictory to its growth narrative. However, this action is part of a deliberate strategy to reallocate resources toward high-growth areas like software and AI-driven cloud services. The CEO has clarified that despite these adjustments, net hiring is expected to reach a five-year high, indicating a strategic reshaping rather than a simple contraction.

Concurrently, IBM continues to reinforce its commitment to long-term innovation. The company's advancement to the second phase of DARPA's Quantum Benchmarking Initiative serves as a critical endorsement of its quantum computing strategy, providing an important quality seal for its research and development efforts.

Adding to its appeal for income-focused investors, IBM maintains its consistent dividend policy. The company will distribute $1.68 per share, yielding 2.2 percent, with an ex-dividend date of November 10.