IBM is pursuing a long-term, strategic approach to AI that prioritizes deep integration with its existing enterprise customer base over chasing short-term hype or market dominance. While it may not become the largest AI company in the world, IBM is positioning itself as a highly profitable provider of AI-enabled infrastructure and services tailored to the needs of large, conservative enterprises. The company’s strength lies in its ability to deliver secure, reliable, and familiar AI solutions within the systems its customers already use. Rather than pushing customers to adopt new, complex platforms or rely on public cloud providers, IBM is enhancing its Power and z systems with AI-specific capabilities—such as matrix math units and the homegrown Spyre AI inference accelerator—enabling AI workloads to run efficiently on existing hardware. This approach resonates with the 100,000+ enterprise clients who value stability, compliance, and control over cutting-edge but risky AI experimentation. IBM’s strategy is already showing results. In the third quarter of 2025, the company reported $16.33 billion in revenue, a 9.1% year-over-year increase, with net income rising to $1.74 billion—up from a $317 million loss the previous year. Gross profit grew 11.2% to $9.36 billion, and pre-tax income in the Infrastructure group surged 52.6% to $644 million, driven by strong demand for the Power11 and z17 server upgrades. System z mainframe sales jumped 60%, and the broader Hybrid Infrastructure segment grew 28% to $2.2 billion. The Software group posted $7.21 billion in revenue, up 10.5%, with Red Hat contributing $2.09 billion—12% higher than the year-ago period. While transaction processing software dipped slightly, other software categories like databases, middleware, and development tools grew 17.5%. Pre-tax income in Software rose 20.6% to $2.37 billion, reflecting strong margins. The Consulting group, though less profitable, remains critical. It generated $5.32 billion in revenue, up 3.3%, with pre-tax income growing 22.7% to $686 million. GenAI consulting bookings jumped by $1.5 billion in Q3, more than doubling from the same period last year. GenAI now makes up 22% of IBM’s $31 billion consulting backlog, signaling strong client interest in practical, enterprise-grade AI implementation. A key part of this strategy is Project Bob, a new code assistant built on Anthropic’s Sonnet 4.5 model, replacing earlier internal efforts. Designed to run on Linux partitions within IBM’s Power and z systems, it leverages Spyre accelerators and is tailored to the 70% of Power Systems and nearly all System z customers who build their own back-office applications. This focus on real-world, in-house development needs gives IBM a unique edge. While Wall Street may not fully appreciate the long game, IBM’s customers do. They are not looking to bet on the next big model or the latest cloud platform. They want AI that works within their existing systems, with minimal disruption and maximum security. IBM is building that future—not by building the most powerful models, but by making AI work better, more affordably, and more reliably in the real world. And in that, it has a clear path to sustained profitability.