IBM Analysis: The Quiet Reinvention — How Big Blue's AI and Hybrid Cloud Pivot Is Delivering Real Results at a 21% Discount
International Business Machines Corporation (NYSE: IBM) has undergone one of the most consequential strategic pivots in corporate history over the past four years. After spinning off its managed infrastructure business as Kyndryl in late 2021, CEO Arvind Krishna has relentlessly reoriented the 114-year-old company around hybrid cloud and artificial intelligence — and the financial results are starting to vindicate the strategy. IBM now trades at $256.40 per share, down roughly 21% from its 52-week high of $324.90 but still up meaningfully from its 52-week low of $214.50. The $240 billion company sits at an interesting crossroads: investors who bought the AI hype in late 2024 have been shaken out, but the underlying business is accelerating. Fiscal year 2025 delivered IBM's strongest revenue growth in over a decade, with full-year revenue reaching $67.5 billion across the four quarters — a significant step up from $62.8 billion in FY2024. The Q4 2025 quarter was particularly striking, with revenue hitting $19.7 billion and diluted EPS surging to $5.88 on the back of a substantial tax benefit. IBM's hybrid cloud platform, anchored by Red Hat, and its watsonx AI suite have become genuine growth engines rather than marketing buzzwords. With the stock pulling back to a 23x trailing PE — a notable discount to the broader tech sector — the question facing investors is whether IBM's transformation deserves re-rating or whether this is simply a legacy company borrowing momentum from the AI cycle.