IBM’s SaaS Saga: From Punch Cards to Platforms

Remember the ship that got stuck in the Suez Canal a few years ago? Strong winds caused the massive vessel to run aground along the narrow waterway, blocking billions of dollars of goods from getting to their respective markets. Like a fat man trying to navigate an airplane aisle on a budget airline, the Ever Given was simply too overloaded to respond quickly enough to avoid getting stuck. The same could be said of big, bloated corporations like IBM (IBM), a stock that has been sinking under its own weight – until recently. 

As we’ve documented over the years, IBM has been trying to pivot into a leaner organization by taking ozempic emphasizing AI and software over its iconic mainframe computers. Shareholders have historically endured lackluster stock performance in exchange for reliable dividends. In our last analysis on the topic of whether this old dog could learn new tricks, we concluded that IBM will likely always be a value stock rather than a growth play. 

But the company’s 2024 year-end results beg for a second opinion. IBM wrapped up the year with $12.7 billion