Inside IBM’s rebound: Can CEO Arvind Krishna bring the tech company back to its former glory?

The IBM Watson Research Center in Yorktown Heights, N.Y., is a midcentury modern marvel of sweeping curves and soaring glass. Designed in the early 1960s and nestled in rolling hills north of New York City, the building was the final project of the visionary architect Eero Saarinen, known for futuristic designs that captured the spirit of technological advancement, like the Gateway Arch in St. Louis and the TWA Flight Center at JFK airport.

The iconic architecture is a striking reminder of what IBM once represented: relentless innovation, industry-shaping technologies, and undisputed dominance. This was the birthplace of the punch card, the magnetic-stripe credit card, and the personal computer. It made towering mainframe computers that were indispensable to banking and health care.

But by the time CEO Arvind Krishna strode into the building in November 2021 for the company’s annual Global Technology Outlook briefing, the building was in danger of becoming a relic of corporate history—as was IBM itself.

The venerable company had barely half the revenue it generated at its 2011 high-water mark. In recent decades, it had ceded the personal computer market to Microsoft while becoming, for many, a symbol of rigid management and bloat. Even more famously, IBM had face-planted in artificial intelligence, as the much-hyped Watson platform failed to live up to its initial promise. By April 2020, when Krishna became CEO, IBM was the only one among the 17 U.S. tech companies valued at $100 billion or more to have lost market value over the previous eight years.

Krishna did not want to preserve a dusty legacy. He needed to reignite Big Blue’s drive to turn breakthrough technologies into compelling products. That’s why he listened intently at the leadership briefing as IBM’s head of AI research, Sriram Raghavan, made a presentation about a new approach to building AI: large language models pre-trained on massive datasets.

Chart shows IBM ranking on the Fortune 500 list.

It was a full year before OpenAI would unveil ChatGPT and make generative AI famous. The presentation was dense and technical; Raghavan urged the gathered IBM executives to bear with him. But Krishna, a PhD engineer with decades of research experience, instantly recognized a game changer—and a huge opportunity. Once these models were mature enough, he realized, they would be able to help businesses handle everything from customer service to chemistry equations to climate modeling with unprecedented scale and efficiency—creating powerful new products for IBM to sell.

Energized and electrified, Krishna immediately made a big bet on IBM’s future. He gave his management team the green light to steer billions in R&D money into new AI “foundation models” and the infrastructure to support them. He also pushed the company to prepare for the rise of AI by updating its hybrid cloud platform—data-storage technology that Krishna had championed as the head of IBM’s cloud division.

The pivot exemplifies the qualities that analysts and colleagues say make Krishna the right CEO at the right time. The 62-year-old is IBM’s first-ever CEO with a research and engineering background, while his 35 years at the company have helped him develop a formidable product and business acumen. As IBM works to shed its vintage image, Krishna has zeroed in on three pillars he believes are crucial to its revival: AI, cloud computing, and a bold, multi-decade bet on quantum technology.

IBM’s AI strategy today looks radically different from that of competitors like OpenAI, Meta, and Google. Rather than chasing flashy, consumer facing applications focused on massive, general-purpose language models, IBM has doubled down on the less-sexy side of generative AI.

Its flagship offering, Watsonx, is optimized for relatively niche business functions like financial services, supply-chain optimization, and IT operations, and IBM aims to embed the technology into the critical infrastructure of its corporate clients.

IBM’s recent rebound rests on two factors: A big commitment to AI and the hybrid cloud; and a faster-moving culture that emphasizes autonomy and rapid iteration.

Krishna’s innovations follow a long and often painful pivot. Over the past decade, IBM has shed headcount as it reoriented itself around new technologies. At the end of 2024 it had about 100,000 fewer employees than in 2015. It has abandoned or spun off business lines that no longer feel “core.”

But Wall Street finally likes what it sees. Since Krishna took over as CEO, the company’s share price has doubled, climbing through a string of record highs since last August. Generative AI bookings have reached $6 billion since June 2023—a meaningful sum at a company with $63 billion in annual revenue in 2024—and IBM’s increasingly streamlined software business is growing rapidly. Former IBM CEO Lou Gerstner, who famously revitalized the company in the 1990s, titled his memoir Who Says Elephants Can’t Dance? Today, some would argue that Krishna has the IBM pachyderm prancing with more agility than it has in decades.

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