Prediction: This Fallen Artificial Intelligence (AI) Stock Could Be the Comeback Story of 2026

Key Points
International Business Machines has been helping customers build out their AI assets.
IBM’s business supporting companies using COBOL suddenly became an issue due to advances in AI programming.
AI is unlikely to replace IBM's services, but it will likely make the company a better service provider.
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Wall Street is a fickle place, with emotions often driven by news flow. In late February 2026, news that Anthropic's artificial intelligence tools could tackle COBOL coding tasks sent International Business Machines' (NYSE: IBM) stock crashing. IBM is still 20% below its 52-week high as of this writing. With the technology giant in its own personal bear market, long-term investors might find it an attractive way to play the AI space. Here's why.
IBM is helping to build the AI infrastructure
Putting COBOL aside for the moment, one of IBM's key business focuses has been to help companies build hybrid cloud systems. Essentially, that means that a company has data stored on both an external cloud system and an internal one. Companies do this to protect vital information they may have. IBM's services and technology enable smooth processes across what amounts to a very complex computer setup.
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Artificial intelligence is a big and increasingly important piece of the puzzle. Thus, IBM is directly benefiting from AI and should remain a key player in the space for the foreseeable future. It just isn't a headline act, because it is a business-to-business company that works in the background.
COBOL won't take down IBM
However, IBM made headlines regarding AI in late February when Anthropic announced its COBOL programming advances. COBOL is a very old computer language that is still widely used today. IBM helps support companies that are using COBOL, so AI could be a threat to this part of the technology giant's business. However, investors have likely reacted too quickly and too negatively.
It is highly unlikely that AI alone can replace the services IBM provides, which include ensuring that a business customer's logic and workflow needs are met. It is highly likely that IBM's services will still be needed. In fact, AI tools are more likely to help IBM better serve its customers. So this negative might actually be a long-term positive if it enhances IBM's capabilities.
What's notable for long-term investors is that the drawdown has pushed IBM's price-to-earnings ratio down to roughly 23x. That's well below its five-year average P/E of nearly 30x. To be fair, a 23x P/E isn't likely to interest value investors. And it is worth pointing out that the stock's price-to-sales and price-to-book ratios are still above their five-year averages, so it is hard to argue that IBM is trading at fire-sale prices. But growth at a reasonable price investors looking for a way to play the AI revolution might find IBM of interest after the recent sell-off, noting that Nvidia's (NASDAQ: NVDA) P/E ratio is dramatically higher at 36x.
Quantum could be the bigger AI story
AI, hybrid cloud, and COBOL are all here-and-now stories. However, quantum computing could be the next big hit for IBM. The company is at the forefront of quantum computing, which could materially increase computing power. That plays into AI because it requires significant computing power. Unlike many other AI stocks, IBM is not a one-trick pony. It is a diversified business with a long history of shifting with the technology sector, and it often helps shape the changes driving the industry forward.
So, from a big picture perspective, it appears that investors have punished IBM for near-term issues that may, in fact, be overblown. Meanwhile, for those who think long term, IBM is likely to remain a key player in AI and use that technology to better serve customers. And it is a leader in new technology that could help support AI over the long term. As far as I'm concerned, that sounds like the foundation for a good comeback story.
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Reuben Gregg Brewer has positions in International Business Machines. The Motley Fool has positions in and recommends International Business Machines and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.