International Business Machines Corporation (IBM): A Bull Case Theory

We came across a bullish thesis on International Business Machines Corporation on wallstreetbets subreddit by Gambler_Addict_Pro. In this article, we will summarize the bulls’ thesis on IBM. International Business Machines Corporation's share was trading at $253.44 as of September 12th. IBM’s trailing and forward P/E were 40.88 and 21.88 respectively according to Yahoo Finance.

IBM has recently emerged as an underappreciated beneficiary of the enterprise AI wave, positioned to leverage its scale and longstanding customer relationships. While many investors focus on fast-growing startups or high-momentum names like Oracle, IBM has been quietly consolidating its capabilities in AI infrastructure, enterprise cloud, and hybrid solutions. At the center of this strategy is Watsonx, a platform designed to capture corporate AI contracts.

Unlike newer entrants still fighting for recognition, IBM already commands a strong foothold with global enterprises, giving it an advantage in execution and adoption. This established client base provides a natural channel for AI-driven growth while reinforcing IBM’s status as a trusted technology partner. Importantly, IBM is not a speculative high-flyer; rather, it is a blue-chip stock that has been dormant for years, offering a different risk profile. Investors benefit from a reliable dividend, providing a cushion if the stock remains range-bound.

The downside risk is limited compared to more volatile AI peers, as IBM’s diversified operations, stable cash flows, and balance sheet strength create resilience. Meanwhile, potential upside stems from its AI push coinciding with favorable macro conditions, such as expected Federal Reserve rate cuts, which could re-rate value-oriented tech stocks. The narrative is straightforward: IBM offers safety and income in the base case, while the AI opportunity—layered on top of its entrenched enterprise presence—creates meaningful optionality for growth. This makes IBM an attractive contrarian way to gain AI exposure, blending stability with potential for a structural revaluation.

Previously we covered a bullish thesis on International Business Machines Corporation (IBM) by Magnus Ofstad in December 2024, which highlighted the company’s push into agentic AI and the transformative potential of watsonx.ai. The company's stock price has appreciated approximately by 10.67% since our coverage. This is because optimism around AI adoption persisted. The thesis still stands as IBM remains central to enterprise AI. Gambler_Addict_Pro emphasizes its blue-chip stability.

International Business Machines Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 63 hedge fund portfolios held IBM at the end of the second quarter which was 57 in the previous quarter. While we acknowledge the potential of IBM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.