Group 1 - IBM's AI order book has shown significant growth, increasing from $2 billion in summer 2024 to $7.5 billion by Q2 2025, excluding other AI services [2] - The company's revenue growth is at levels not seen since 2011, with stock gains of 27% over the past year and 114% over three years, starting from a low valuation in 2022 [3] - Despite recent stock performance, IBM's shares are still considered affordable, trading at 22.7 times forward earnings and 20.7 times trailing free cash flow, compared to the S&P 500 averages of 24 and 29.9 respectively [6][7] Group 2 - The momentum in the AI market is driving IBM's stock performance, suggesting that it may still be a good time to invest despite the rising prices [4]

Core Viewpoint - Oracle's stock has surged 97% in six months, reaching a market cap of $855 billion, driven by cloud computing deals amid the AI boom, but concerns exist about the sustainability of this growth [1][2] - IBM, a long-time rival of Oracle, is building a significant AI presence and is currently undervalued with a market cap of $244 billion, potentially positioning itself to surpass Oracle in market value by 2030 [3][15] Group 1: Oracle's Performance - Oracle's stock performance is impressive but appears fragile, with high valuation multiples suggesting that investors expect continued growth [2] - The company is generating lower total sales compared to IBM, and its cash profits are declining into negative territory [8][15] - Oracle's AI capabilities are similar to IBM's, but it lacks the same level of integration and long-term client relationships [6][7] Group 2: IBM's Strategy and Growth - IBM is focusing on large enterprise clients and building robust AI systems that emphasize data integrity and security, which differentiates it from competitors [11][12] - The company's generative AI contracts have increased significantly from $2 billion in mid-2024 to $7.5 billion, indicating strong growth potential [14] - IBM's stock is trading at 20 times free cash flow and 22 times forward earnings, while Oracle's free cash flows are negative and its forward earnings are at 37 times, suggesting IBM is currently a better investment [15][16]