IBM (IBM, Financials) is doubling down on artificial intelligence and mainframes as it looks to boost margins and reignite growth, according to Stifel analyst David Grossman, who came away positive after attending the company’s investor event.
The tech giant is rolling out AI tools across its own operations to cut costs and increase efficiency. That could mean more room in the budget for research, marketing, and acquisitionsareas IBM has struggled to fund in the past.
One internal tool, watsonx Orchestrate, is being prepped for a broader commercial launch. If successful, it could become a key productivity product for enterprise clients and open new revenue streams.
IBM is also gearing up for the z17 mainframe launch. The company sees it as a chance to bring back customers that shifted to x86 servers or the cloud. Down the line, it may even offer mainframe access as a service.
While IBM is clearly leaning more into growth, Grossman said it will likely continue to be seen as a steady, defensive pick in the short run.
Investors will be watching how quickly IBM can turn internal innovation into commercial wins and whether the mainframe refresh delivers.
This article first appeared on GuruFocus.