Tech Buzz: 70% of Your Credit Card Bills Are Processed by This Company! This Legacy IT Giant’s Stock Plunged 25% in a Day—Buried in AI Ashes?

Almost every time you use a credit card, the authorization process is handled by IBM's systems. Approximately 70% of transactions for global insurance companies, banks, and airlines rely on IBM's mainframe computers. However, amid the AI revolution, the role of this 'Blue Giant' is gradually fading. Following a preliminary earnings forecast, IBM's stock plunged nearly 25% in a single day, wiping out nearly $70 billion in market value. With around 270,000 employees—over 40% more than Alphabet, Google’s parent company—can this legacy tech giant adapt to the AI era? Could quantum computing be its savior?

In a recent interview, IBM CEO Arvind Krishna stated that AI will bring new opportunities to the 115-year-old company. To understand IBM’s future, one must first understand its past and how it currently generates revenue.

IBM has long been known for its enterprise mainframe computers, which remain widely used in sectors requiring extreme reliability—such as bank account management, insurance policy processing, and airline reservation systems. In fact, IBM’s Z-series mainframes are said to process over 70% of the world’s financial transactions in the backend.

However, in today’s cloud- and AI-driven landscape, this hardware-centric business model is showing signs of stagnation. Meanwhile, IBM has developed its own AI platform, watsonx, to help enterprises adopt AI. It also leads in quantum computing research, unveiling a processor with over 1,000 qubits in 2023, showcasing significant technological progress.

Still, the market demands visible growth. Demand for its legacy mainframe systems is gradually declining, and the monetization of new growth engines like AI and quantum computing remains slow. As a result, investors have turned cautious, negatively impacting the stock price.

Since taking office in 2020, CEO Arvind Krishna has pushed a strategy focused on cloud and AI. The acquisition of Red Hat was part of this effort, aiming to strengthen IBM’s position in open-source and hybrid cloud. Yet, as competitors like Microsoft, Google, and NVIDIA surge ahead, IBM’s market presence appears to be diminishing.

For IBM to survive, practical quantum computing applications and accelerated enterprise adoption of watsonx are essential. Additionally, cost restructuring and workforce optimization may be demanded by the market. Whether IBM will be buried in the 'ashes of AI' or rise again as a 'blue flame' depends on its performance in the coming quarters.