Why IBM Stock Gained 35% in 2025

Core Insights - IBM's stock experienced a remarkable increase of 34.7% in 2025, significantly outperforming the S&P 500, driven by the growth of its AI business and advancements in quantum computing [1] AI Business Growth - IBM's AI strategy focuses on creating solutions for enterprise clients, primarily through its consulting business, which accounts for the majority of AI bookings, supplemented by the watsonx platform [3] - The AI business revenue reached $5 billion at the end of 2024 and nearly doubled to $9.5 billion by the end of Q3 2025, prompting IBM to raise its full-year revenue growth outlook to over 5% and project $14 billion in free cash flow [4] Quantum Computing Developments - IBM is actively working on making quantum computing practical, with a roadmap predicting the development of large-scale, fault-tolerant quantum computers within a decade [6] - By the end of 2026, IBM aims to demonstrate that quantum computers, in conjunction with traditional computing, can outperform traditional methods for real-world applications, with the first fault-tolerant quantum computer expected to be available by 2029 [7] - The potential of quantum computing to revolutionize fields such as materials science, drug discovery, and AI has garnered investor interest, contributing to IBM's stock performance [8]