How IBM surged 13% while the market sank in the first quarter of 2025
Stocks International Business Machines (NYSE: IBM) It rose 13% in the first quarter of 2025 Data from S&P Global Market Intelligence. The tech veteran stock got a modest hit in the tariff drama in early April, S&P 500 (snpindex: ^gspc) The market index has been around since the beginning of the year.
IBM’s charts diverged from the wider market twice in the first quarter.
First, Big Blue reported an impressive fourth quarter results on January 29th. Bottomline revenue of $3.92 per share reached Wall Street consensus estimates of $0.12. CEO Arvind Krishna highlighted the strong growth of the Red Hat segment along with the interest of game-changing clients on the Watsonx Generative Artificial Intelligence (AI) platform.
Long-term trading list Generation AI Products and services were $5 billion by the end of the year, up from $3 billion in the last quarter. Due to these comprehensive growth trends, management predicted full-year revenue growth would accelerate from 1% in 2024 to about 5% next year.
IBM stocks rose more than 14% the following dayClose back down to a still impressive 13% jump at the bell.
The second bump took place on March 7th, with IBM’s stock increasing by 5.2% on a generally quiet day on the stock market. The biggest news from IBM that day was the opening of the Cloud Computing Research Centre in Romania. This is a joint project with Amazon The Amazon Web Services (AWS) unit will enhance both companies’ access to the thriving European market and local engineering talent.
The growing relationship between IBM and Amazon is great news for Big Blue as Amazon relies on the company’s consulting services to manage and support AWS contracts around the world.
IBM’s tariff tumble is not particularly dramatic, following a 9% decline in the S&P 500 in April.
IBM investors made 20% profit last year, but the S&P 500 has returned to where it started with a 2% drop. Big Blue’s 3% dividend yield is roughly twice the average payments across the popular market index, so IBM’s advantages are greater when you include reinvestment dividends.
The company was a bit late to take part in the AI market spike, but IBM’s enterprise-centric approach to generative AI tools has begun to pay off. The stock is still very affordable even after the recent surge, trading at 3.3x sales and 17x free cash flow. If you’re looking for a good AI stock trading at a modest price, IBM is one of my top picks right now.