IBM stock pushed higher Tuesday after four straight down days. The tech giant is launching a new mainframe that it said is "fully engineered for the AI age."
The new z17 mainframe draws on a new processor from IBM to power 50% more AI inferencing operations per day compared to its predecessor, according to IBM's news release Tuesday.
"The new IBM z17 is built to drive business value across industries with a wide range of more than 250 AI use cases, such as mitigating loan risk, managing chatbot services, supporting medical image analysis or impeding retail crime, among others," the company's news release said.
While enterprise computing has steadily moved to the cloud over the past decade, IBM says its large mainframes are still a key IT tool for businesses. IBM mainframes are used by 45 of the top 50 banks, four of the top five airlines, seven of the top 10 global retailers and 67 of the Fortune 100 companies, according to the company.
The new mainframe fits within a broader hybrid push for IBM for enterprises with operations split between cloud servers and on-premise infrastructure. The z17 will be available June 18, according to IBM's announcement.
IBM's 'Mainframe Tailwinds'
IBM's infrastructure segment was responsible for about 22% of the company's $62.8 billion in 2024 sales. But overall infrastructure sales fell 4% last year and 4.5% in 2023. The company's 1.5% revenue growth last year was powered by a 3% gain in its software segment and 3.5% growth for its consulting segment.
But analysts have been debating whether a new mainframe upgrade cycle for enterprises could return the segment to growth.
Evercore ISI analyst Amid Daryanani cited "mainframe tailwinds" Tuesday in an upbeat note on IBM stock.
Daryanani wrote that the "upcoming z17 mainframe cycle should contribute to growth following two consecutive years of (year-over-year) declines."
Evercore ISI's Daryanani reiterated an outperform call for IBM and a price target of 275 in the client note Tuesday.
"We continue to hold a constructive view on IBM and believe the company is well positioned to meet (if not beat) their target model introduced during their recent analyst day event," Daryanani wrote. "Although there have been concerns surrounding broader macro uncertainty/tariffs, we think IBM's business should be relatively more insulated against any potential economic headwinds vs. peers – mission critical solutions, G2000 (Forbes Global 2000 company list) customer base, high recurring software/services revenue mix."
IBM Stock: Support At 200-Day Moving Average
IBM stock rose around 2% to 230.22 on the stock market today. U.S. tech stocks more broadly are bouncing back from steep losses last week. The gains follow indications the Trump administration will negotiate its tough stances on tariffs.
IBM stock has gained 7% year-to-date, outperforming a 10% loss from the S&P 500. Shares of the more than century-old tech company rallied 35% last year, helped by Wall Street's increasing confidence the tech giant can benefit from AI demand. Shares returned to record highs for the first time in a decade.
But IBM stock has taken a hit this month amid concerns about the broader economy brought on by tariffs. IBM fell 7% last week and lost a fraction Monday. However, IBM rallied back above its 200-day moving average after falling below the long-term support level in intraday trading Monday.
IBM stock also took a last month after technology consulting rival Accenture warned U.S. government business could see slower growth, citing broad federal spending cuts promised by the Trump administration and Elon Musk's DOGE initiative.
