IBM has underappreciated AI potential: BoFA
Shares of IBM (IBM) are trading higher on Tuesday after Bank of America issued a bullish note on the company. The analyst behind the note claims that IBM is repositioned for substantial growth, thanks in part to its use of AI. CNBC also revealed that the company is cutting employees in its marketing and communications division.
Yahoo Finance Anchors Julie Hyman and Jared Blikre discuss how IBM's deployment of AI may boost the company's productivity and growth.
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
JULIE HYMAN: Let's talk about another analyst call right now. This time it's IBM. Those shares are trending today, and they're up almost 3 and 1/2 percent. Bank of America behind this call too, coming out with a bullish note on the company's future. Analyst Wamsi Mohan saying that IBM is repositioned for substantial growth and suggested that artificial intelligence boom will be similar to the internet in its power to unleash growth. And so that's part of it.
We should also note that there is a new report just out from CNBC saying that the company, that IBM that is, is cutting some employees in its marketing and communications division. That it's told them that it is cutting the size of its staff. However, that IBM note from Bank of America doesn't really have to do with cutting or at least not directly, but it does address the idea that AI is already starting to replace some other types of roles, programming and such within the company.
JARED BLIKRE: And it's elevating the roles of so many people. I'm finding completely unlikely uses for ChatGPT in my own life. I can only imagine what's being done at the corporate level. And it's not like it's eliminating jobs so much as allowing people to do that much more. Some of the longer term charts on productivity, where we've seen just the productivity sideways slant or trade for years and years, it is now just breaking to the upside. So just based on that alone, there's a lot of upside potential.
Just want to go to the Wi-Fi interactive if I can real quickly. I have a max chart of IBM going back to the early 1970s, maybe even the late 1960s. But we three, we see some big consolidation patterns here. One was in the late 90s and the early 2000s in the aughts. That resolved itself to the upside. We are now in another one which came just below into the other consolidation, as now accelerated to the upside. And we would probably pause here, but I would expect if we break to the upside, well, you've got another huge burst just waiting to happen--
JULIE HYMAN: We'll see.
JARED BLIKRE: --potentially.
JULIE HYMAN: We'll see. I mean, Bank of America says that the AI business at IBM is already a $100 billion book of business, and it's growing.
