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Can IBM's AI Investments Secure Future Market Leadership?

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Key Takeaways

  • IBM partners with Pearson to develop AI-driven learning tools for individuals and organizations.
  • IBM strengthens its AI offerings via WatsonX, hybrid-cloud solutions, and generative AI collaborations.
  • IBM invests $500M in early-stage AI ventures and expands enterprise AI through strategic partnerships.

International Business Machines Corporation ((IBM - Free Report) ) and Pearson have teamed up to create AI-powered learning tools for individuals and organizations worldwide. The collaboration will help IBM expand its AI applications into education, strengthening its presence in the learning technology market for future growth.

IBM recently launched a $500 million venture fund to invest in early-stage AI companies. The company has strengthened its AI portfolio through its WatsonX platform to deliver secure, scalable, and trustworthy AI solutions that help enterprises build, deploy, and manage AI responsibly across hybrid cloud environments. IBM uses a hybrid-cloud approach with Red Hat OpenShift, allowing enterprises to implement AI across on-premises and cloud environments, making its solutions ideal for regulated industries.

IBM’s recent deal with Confluent, Inc. ((CFLT - Free Report) ) strengthens its AI portfolio by providing real-time, reliable data streaming that supports enterprise AI and generative AI applications. IBM also collaborated with SAP to utilize generative AI and IBM Garage methodology to help retail and consumer-goods companies improve productivity, optimize distribution, and accelerate digital transformation.

Per a report from Precedence Research, the global AI market is expected to grow rapidly in the future, reaching nearly $3,680 billion by 2034 at a CAGR of 19.20% due to rising adoption across industries. By investing in R&D, hybrid cloud, partnerships, and enterprise expertise, IBM is positioning itself as a long-term leader in the AI market.

How Are Competitors Advancing in the Competitive AI Market?

IBM faces competition from Microsoft Corporation ((MSFT - Free Report) ) and Amazon.com, Inc. ((AMZN - Free Report) ). Amazon Web Services (“AWS”) introduced a range of new AI tools and services, including advanced model customization, new AI agent capabilities, and expanded infrastructure offerings to help businesses build and scale AI applications. AWS recently introduced new features in Amazon Bedrock and Amazon SageMaker AI to make AI model customization easier using reinforcement learning. Amazon is investing millions in AI education and skills training globally.

Companies like KPMG are using Microsoft’s AI, including Azure AI and Copilot, to improve workflows and boost employee productivity. Microsoft and the National 4-H Council extended their $10 million partnership to provide AI education and digital skills to rural youth and educators in underserved U.S. communities. Microsoft partnered with Levi Strauss & Co. to create a next-generation AI “superagent” in Microsoft Teams, powered by Azure, to automate workflows and enhance employee and fan engagement.

IBM’s Price Performance, Valuation & Estimates

IBM shares have gained 38.6% over the past year compared with the industry’s growth of 85.6%.

Zacks Investment Research
Image Source: Zacks Investment Research

From a valuation standpoint, IBM trades at a forward price-to-sales ratio of 4.06, below the industry.

Zacks Investment Research
Image Source: Zacks Investment Research

Earnings estimates for 2025 have increased 1.2% to $11.39 over the past 60 days, while the same for 2026 have also rose 1.8% to $12.24.

Zacks Investment Research
Image Source: Zacks Investment Research

IBM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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