IBM was a pioneer in artificial intelligence, creating the first AI to defeat a chess champion (1997) and the first to win at Jeopardy! (2011).
The AI landscape in 2025 is vastly different. While large AI models from Google and OpenAI dominate headlines, IBM’s strategy centers on smaller, reliable AI tools tailored to specific client needs.
This approach reflects a key debate: will AI profits primarily benefit large companies investing in “foundation models,” or will they spread to businesses using AI for increased productivity?
Recent events suggest a shift toward IBM’s strategy. The release of a cost-effective open-source AI model from a Chinese lab, coupled with IBM’s 10% increase in bespoke AI software sales (surpassing analyst predictions), led to a 12% stock price surge and an all-time high valuation of $240 billion.
IBM CEO Arvind Krishna views this as validation of his strategy. He emphasizes the success of smaller, less computationally expensive AI models, potentially challenging the economics of large tech companies. He believes this will create a more level playing field, as reduced training costs and infrastructure demands make AI accessible to a broader range of businesses.
IBM’s reach extends beyond AI, encompassing cloud computing, software development, and consulting. It’s also heavily invested in quantum computing research, anticipating significant breakthroughs before 2030. Krishna believes these advancements will benefit both IBM and its clients, potentially returning IBM to a dominant position in the tech industry, mirroring its past success in mainframes and PCs.
If it does, Krishna is quick to add, much of the value will accrue not only to IBM but also to its clients. But he also says that such a breakthrough could help IBM return to a dominant position in the tech industry, similar to the one that it held for much of the late 20th century as the world’s biggest PC manufacturer. “Assuming the timeline and the [quantum] breakthroughs I’m talking about happen, I think that gives us a tremendous position and the first mover advantage in that market, to a point where I think that we would become the de-facto answer for those technologies,” he says. “Much like we helped invent mainframes and the PC, maybe in quantum we’ll occupy that same position.”
This profile is published as a part of TIME’s TIME100 Impact Awards initiative, which recognizes leaders from across the world who are driving change in their communities. The next TIME100 Impact Awards ceremony will be held on Feb. 10 in Dubai.