1. International Business Machines Corporation (NYSE:IBM)
Year-to-date return as of February 14: 18.80%
One of the biggest providers of IT services globally, International Business Machines Corporation (NYSE:IBM) continues to dominate the mainframe market and has established software and consulting units specializing in hybrid cloud infrastructure and digital transformation initiatives. Over the past few decades, the firm has had to reinvent itself in response to a shifting industry landscape that affected its initial mainframe business. The business has positioned itself to meet the demands of companies looking for hardware, consulting services, and updates for their IT infrastructure. Along with consulting services for project implementation and maintenance, the company’s software products are being utilized in hybrid cloud-focused initiatives. IBM-assisted hardware can also be used for these projects.
International Business Machines Corporation (NYSE:IBM) stated that there was a high demand for new artificial intelligence projects in its fourth-quarter financial results, which exceeded Wall Street’s estimates. As a result, the stock price was up over 18% so far this year, making it the Best Performing Stock.
International Business Machines Corporation (NYSE:IBM) reported $17.6 billion in revenue for the fourth quarter of 2024, a 1% increase YoY. Strong demand for Red Hat drove double-digit revenue growth in the software area. Its generative AI segment has over $5 billion in total sales, up over $2 billion from the previous quarter, highlighting that businesses worldwide are looking to the company for AI-powered transformation. In 2024, it generated $12.7 billion in free cash flow and $13.4 billion in operating cash flow, displaying a high cash performance.
Oppenheimer believes that the company’s move toward a greater emphasis on software has not yet been completely acknowledged by investors. The investment firm gave the IT behemoth an “Outperform” rating when it first started covering it. The price estimate of $320 per share was established by analyst Param Singh, suggesting a possible upside of over 28%. As the market learns more about International Business Machines Corporation’s (NYSE:IBM) strategy shift to software, Singh also anticipates that the company’s worth will rise over time.
Overall, International Business Machines Corporation (NYSE:IBM) ranks first on our list of the 11 Best Performing Dow Stocks So Far in 2025. While we acknowledge the potential for IBM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than IBM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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