IBM Stock Slides on Mainframe Woes, But Generative AI Business Booms

IBM's stock has taken a hit in recent months, falling 22% over the last three months. However, this decline is largely attributed to a cyclical lull in mainframe sales, which make up only 15% of IBM's total revenues.

The company's generative AI consulting business is a bright spot, with a $5.5 billion revenue stream and growing. This stable segment helps offset the volatility of mainframe sales.

IBM's shares trade at 17.3 times forward earnings and sit 31.8% below June's all-time high. Despite this, patient investors may find IBM's stock attractive, given its low-drama AI strategy and generous dividend yield of 3%.