Shares of International Business Machines (NYSE: IBM | IBM Price Prediction) are up roughly 40% in 2025, yet retail traders on Reddit and X remain unconvinced. Current social sentiment sits at 48 out of 100, neutral territory, with recent readings dipping as low as 32. The skepticism stems largely from CEO Arvind Krishna’s public questioning of AI infrastructure economics, the very trend lifting tech stocks across the board. Despite strong Q3 results that beat revenue estimates at $16.30B, traders are pausing at current valuations.
CEO Skepticism Fuels Retail Doubt
The primary narrative driving caution is Krishna’s stark warning about AI data center spending. On the “Decoder” podcast, he estimated that building and outfitting a one-gigawatt AI data center costs $80 billion, with industry plans for 100 gigawatts potentially requiring $8 trillion in capital expenditure. That would demand $800 billion in profits just to cover interest. He pegged the likelihood of achieving artificial general intelligence with current technology at “between zero and one percent.” As one Reddit user in the r/stocks discussion put it: “This is a huge red flag for the entire AI infrastructure buildout. If IBM’s CEO is saying the math doesn’t work, why are we still piling into these stocks?”
IBM CEO says there is ‘no way’ spending trillions on AI data centers will pay off at today’s infrastructure costs
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This creates a paradox. IBM’s own CEO questions the economics of the AI boom while competitors like Microsoft (NASDAQ: MSFT) and Oracle (NYSE: ORCL) bet heavily on it. Microsoft trades at a 35.7% profit margin with overwhelming analyst support, while Oracle commands a P/E of 46.47 near its 52-week high. IBM’s 12.1% margin and mixed execution record, including an 11.2% earnings miss in Q4 2024 and a 4.2% miss in Q3 2025, leave traders wary.
Valuation Concerns Outweigh the Rally
IBM now trades at 36x trailing earnings with a PEG ratio above 2.0, expensive relative to 9% revenue growth. Wall Street’s average price target of $290.89 implies downside from current levels near $324. With four analysts rating the stock a sell and an RSI of 52.96 showing neutral momentum, the 40% run appears fully priced in. Traders are watching whether IBM’s $9.5B AI book of business can justify premium valuations, or if Krishna’s caution signals a ceiling ahead.
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