What’s Next for IBM Stock
Some of our younger readers may not remember this, but International Business Machines Corp. (NYSE:IBM) was a pioneer of artificial intelligence (AI). Now the company is redoubling its efforts in that area, and in doing so, has opened up IBM stock to gains unseen for at least two decades.
The man heading up the AI initiative is IBM’s new chief digital officer, Bob Lord. (Source: “IBM’s chief digital officer Bob Lord says the company is changing its ‘mindset’ so it can appeal to startups and developers,” Business Insider, September 16, 2016.)
Lord is a marketing veteran and a turnaround master, flush from victory at AOL, Inc. (NYSE:AOL). The company’s revenue doubled from $1.5 billion to $3.0 billion during his tenure. AOL was then acquired by Verizon Communications Inc. (NYSE:VZ) for $4.4 billion.
Since that impressive performance, Lord has been highly sought after. The consensus is that he understands where tech is headed, and that he is equipped to lead a public company. Most analysts believe he is the heir apparent at “Big Blue,” so IBM stock will be his responsibility when CEO Virginia Rometty leaves.
The company has already started a gigantic pivot to cloud computing and artificial intelligence, but there hasn’t been much success yet. Since there are dozens of firms entering the same space, IBM stock needs a competitive advantage in order to survive. They haven’t found that magic bullet.
But Lord thinks he has it figured out. He wants to package IBM’s “Watson” technology as an AI system that can help companies solve some of their most critical problems. It should be powerful, easy to adapt for the client’s specific needs, and secure against hackers. That should be enough to guarantee a surge for IBM stock.
However, none of that is possible without incredible coders. Lord understands that companies like Facebook Inc (NASDAQ:FB) and Alphabet Inc (NASDAQ:GOOG) were founded by people who understood software development at the most detailed level. Mark Zuckerberg actually wrote the code for the first edition of Facebook.
As such, Lord thinks IBM needs to appeal to the best coders in the world. “You have to inspire them to join a revolution and they have to come on a journey with you,” he said about software developers. “The journey is to the cognitive era of computing. If you want to be a developer that teaches a computer how to code, you want to be with IBM.”
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