IBM is still in the 'early innings' of AI development: CEO

AI has taken Wall Street by storm as many companies seek to incorporate the technology into their businesses. IBM (IBM) is no different, yet its technology might not be fully priced into its valuation, the tech giant's CEO suggests.

Yahoo Finance Anchors Brian Sozzi and Akiko Fujita are joined by IBM CEO Arvind Krishna at the Annual Milken Global Institute Conference to explain why IBM's valuation may not be on par with other AI stocks.

"We are building, we're staying in the right places that have credibility, we work with enterprise, hybrid cloud, AI, and quantum down the road. By the way, I don't think quantum or AI is fully priced into where we are, but I'll acknowledge that quantum is still three to five years out, and AI is kind of in its early innings," Krishna says.

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This post was written by Nicholas Jacobino

Video transcript

It sounds like just listening to here.IBM is working on some really cool and packable stuff on a I.Why do you think that the valuation on IBM may not reflect or be on par with some other A I place.So I'm gonna go cup half full and then address your question directly.First, I think we've had a pretty good run over the last four years.Um, if I look at the last four years, I think we might have added 60 to 80 billion worth of, uh uh, total enterprise value.So I'd say that's good.Now that does not meet our one aspiration.So let me acknowledge that point.But I think that as we begin to make progress, we've got to be more consistent in our overall revenue and cash flow performance.I think our cash flow performance has been pretty consistent, but we've probably got to be a bit more consistent on revenue performance.And as that happens, I think we'll get both the multiple re rating, but also the growth that comes with the underlying cash flow and earnings growth.So I think those are the two pieces.I'm very confident that Our strategy is in the right place.We are building.We're staying in the places that we have credibility.We work with the Enterprise hybrid Cloud A I and Quantum down the road.And by the way, I don't think quantum or a I is really fully priced and into where we are.But I'll acknowledge Quantum is still 3 to 5 years out, and a I is kind of in the early innings.I use a baseball analogy.A. I is kind of in the first innings of a game.Don't quite know how it will go.Cloud is more like the fifth or sixth inning.So if you have a pretty good idea, not over yet, but a pretty good idea.