IBM Just Time Traveled to 2000… What in the Dot-Com Bubble Is Happening?

IBM is out here partying like it’s 1999. The company that gave us the TrackPoint (that tiny red joystick on Thinkpad laptops) reported a big beat on the top and bottom lines. Shares mooned nearly 13% on the day, which made Thursday IBM’s best since 2000 A.D. Software sales (aka AI) carried the team with 10% growth YOY.

I wasn’t joking, IBM just pulled off its best trading day since 2000 (24 years ago). Let that sink in. The last time Big Blue had this much swagger, people were panicking over Y2K, Napster was blowing up, and everyone thought Family Video would be around forever. Fast forward to today, and IBM is suddenly more relevant today, than when I was in diapers. Shares rocketed up nearly 13% on Thursday after the company posted a rare earnings beat that had everyone pretending they’d believed in IBM all along (they definitely didn’t).

So what’s behind this Cinderella story? Artificial intelligence, obviously. Because even with DeepSeeks' big prank (that I believe they used to short NVIDIA), painting “AI” on your business is still like adding “organic” to a Pop-Tart box… people lose their minds over it and will pay double the price. CEO Arvind Krishna went full Tony Robbins hype-man mode, bragging about $5 billion in generative AI bookings while probably Googling “how to make AI sound cooler.” And of course, Wall Street bought it.

(Source: Fox Business)

IBM reported $3.92 per share in adjusted earnings (beating the $3.75 expected) on $17.55 billion in revenue (just barely squeaking by expectations). But no one cares about the numbers… they care about the narrative. This is far more than a company meeting expectations… this is about IBM trying to claw its way out of irrelevance. The AI-powered software business grew 10%, while everything else (consulting, infrastructure, your will to live) either stagnated or shrank. Naturally, the headline was all about AI, because no one’s clicking an article about IBM’s consulting revenue dropping 2%.

Now with that said, this isn’t some miraculous turnaround. IBM still has all the sex appeal of a 100 year old (if you squint hard enough).  The company is essentially duct-taping its future to AI and hoping no one remembers that for years. Sure, the software growth is nice, but consulting is losing money, infrastructure is in free fall, and the rest of the business feels like it’s heading toward extinction. But hey, when you’ve been down for as long as IBM, even a dead cat bounce feels like a win.

This stock rally doesn’t mean IBM is “back.” It means Wall Street is so thirsty for AI winners that it’s willing to overlook the fact that IBM’s been trying to reinvent itself for the better part of two decades. Remember when your uncle bought Bitcoin in 2017 and acted like a genius? That’s the energy here. Sure, IBM’s generative AI bookings are up 67% from last quarter, but let’s not pretend this is OpenAI or even Google. This is IBM, the company that gave us Watson… a product that peaked when it won Jeopardy and then disappeared faster than my dads 401k in 2008. 

Naturally, analysts are a little more logical. JPMorgan is “encouraged” by IBM’s software momentum and Goldman Sachs reiterated its buy rating, probably because they’re still holding bags from IBM’s last “turnaround” pitch. However, IBM’s consulting and infrastructure is about as “has-been” as one could be. Meaning, AI might be the new toy in IBM’s arsenal, but one strong quarter doesn’t erase years of mediocrity.

So, is IBM cool again? Not even close. But for one glorious day, it managed to convince the market that it was. Enjoy the moment, Big Blue… you’ll need it when the buzz wears off, and everyone remembers that you’re still IBM.

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