The $150 billion investment is over five years, with $30 billion going to mainframe and quantum computing.
IBM has grown its stock price and technical capabilities under CEO Arvind Krishna, but revenue growth remains anemic.
Investors may need more clarity about how the company will fund this spending.
The latest company to jump on the “build American” bandwagon is International Business Machines (NYSE: IBM). The venerable tech giant derives a significant amount of its revenue from cloud and mainframe computing.
Now, the company plans to invest $150 billion over the next five years, and about $30 billion of that will go to investments in mainframe and quantum computing.
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Nonetheless, despite the technical pivots into the cloud and its mainframe business made by CEO Arvind Krishna, IBM has remained a slow-growth company. While IBM stock has outperformed the market since Krishna took over in April 2020, these investments are not certain to bolster the investment case for IBM stock.
Admittedly, the investment could be transformative for IBM. The company spent only $321 million in capital expenditures (capex) during the first quarter of 2025 and $1.1 billion in 2024. Hence, a plan to invest an average of $30 billion per year for the next five years could bring significant change to this business.
The move is likely encouraging to IBM bulls, who may be happy with Krishna’s revamping of the company but are disappointed by the growth rate. Thanks to the $34 billion purchase of Red Hat in 2019, IBM made itself a leader in the hybrid cloud and made critical advancements in artificial intelligence (AI).
Also, investments in supercomputing could make it a leader in supercomputing and, later, quantum computing as that technology becomes more prominent.
Nonetheless, in Q1, revenue of $14.5 billion grew by only 1% year over year. Although the software segment grew revenue by 8% over that period, the company’s other three segments experienced a revenue decline.
That probably means IBM will have to improve the performance of most of its businesses to maintain stock price growth. Although the 40% rise in the stock price bodes well for IBM, its 41 P/E ratio may limit near-term growth without significant improvement.
Moreover, investors have good reason to wonder how IBM will fund its capex investments. As of the end of Q1, IBM holds about $17 billion in liquidity. Plus, it expects to generate $13.5 billion in free cash flow in 2025, improving on the $12.7 billion reported in 2024.
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