IBM Stock Jumps 16 Percent in September Here’s Why Investors Are Excited

IBM stock experienced a surge in September, rising by 15.9%. This recovery follows a challenging summer, driven by significant developments in artificial intelligence (AI) and quantum computing. The increased interest in these technologies has created excitement among investors. Emegypt explores what fueled this stock rally.
AI Boom Elevates IBM
The AI industry has witnessed a flurry of activity. Although IBM’s AI projects may not frequently make headlines, the company has solidified its position as a leader by focusing on enterprise solutions. With over $7.5 billion in generative AI business secured to date, IBM continues to develop comprehensive solutions, combining consulting, software, and strategic partnerships.
Recent significant industry events include:
- OpenAI and Oracle’s substantial AI computing deal.
- Nvidia’s $100 billion investment in OpenAI.
- The Stargate project agreements with memory chip manufacturers to supply large quantities of chips.
IBM benefits as the AI demand pushes its capabilities forward, even without specific new developments from its AI division.
Quantum Computing Achievements
Beyond AI, IBM and HSBC announced a breakthrough in quantum computing. HSBC used IBM’s quantum resources to significantly enhance bond trading predictions, achieving a 34% improvement. This development represents a crucial step, even though practical, fault-tolerant quantum computers remain years away.
IBM has secured around $1 billion in bookings related to quantum computing. According to McKinsey, this field might reach a market size of $198 billion by 2040.
Looking Ahead
IBM anticipates a 5% growth in revenue adjusted for currency by 2025. Despite economic challenges affecting discretionary tech projects, IBM’s enterprise AI focuses on enhancing efficiency and reducing costs, making it resilient to hype fluctuations.
Meanwhile, quantum computing could have a considerable future impact as IBM advances its roadmap. With an expected free cash flow of $13.5 billion this year, IBM’s stock valuation, with a price-to-free cash flow ratio of about 20, is deemed fair given its long-term potential in AI and quantum computing.