IBM (IBM) is placing greater focus on young firms that can help large clients adopt new AI and quantum technologies. The plan comes from Emily Fontaine, the head of the fund team at IBM Ventures, who spoke with Fortune. She said the fund has made 23 moves in areas such as AI tools, data work, error control for quantum chips, and cyber tools. She said, “We look at three key areas for every one of our investments. The first is products or capabilities. The second being: Are they an ecosystem partner? The third being: Are they very disruptive to industry.”
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As a result, the fund leans toward firms that sell to large groups and not to the public. This path gives each firm a quick way to reach new clients in the IBM network. It also gives IBM a new set of tools for its own teams. For example, the firm uses an AI-based help tool called AskHR, developed through work with firms tied to the fund. Fontaine said IBM is on track to save $4.5 billion in running costs this year due to new AI use in its own work. This shows how the fund aims to build a loop that helps new firms and helps IBM at the same time.
Meanwhile, IBM shares dropped slightly on Wednesday, closing at $303.21. Still, the stock rose 42% year-to-date.
Where Quantum Fits In
IBM also wants young firms that build easy ways to use quantum tech. Quantum chips still make rough signals, so the firm looks for tools that clean the results. One firm in the group is QEDMA, an Israeli start-up that builds error-control tech to make chips clearer and more stable. Fontaine said this part of the plan is shaped by the needs of large banks. Many banks want to plan for a time when quantum chips may break old guard systems. She said, “The banks are at the forefront of wanting a quantum strategy. You need to be quantum safe, which is what you need to be doing.”
So far, the fund has seen some early wins. One firm, Gem Security, was sold to Wiz for a valuation near $350 million. Another firm, Lightspin, another Israeli startup, was sold to Cisco Systems (CSCO) for a value of $200 million to $250 million. Fontaine did not share full fund returns, yet she said she was pleased with what she had seen.
As IBM keeps its plan on track, the fund wants firms that can plug in with ease to the IBM client base, help with AI and quantum use, and build tools that add value right from the start.
Is IBM Stock a Buy or Sell?
Turning to the Street, IBM holds a Moderate Buy consensus, based on 14 analysts’ ratings. The average IBM stock price target is $300.58, implying a 0.87% downside from the current price.
