IBM as a heritage company

 

You said:

IBM fell sharply today, on "Anthropic threat." While I trust journalistic explanations of one-day stock moves as just something they have to think up to give an appearance of understanding the un-understanable, I do wonder what that headline might have meant.

ChatGPT said:

You’re right to be skeptical of single-day headline explanations. Very often the “reason” given for a one-day market move is just a convenient narrative after the fact rather than a verified causal mechanism.

The phrase “Anthropic threat” in that context almost certainly refers to competitive pressure from the AI company Anthropic, which develops large language models and has partnerships with major cloud providers. The implication is probably that investors became concerned that advances or market positioning by Anthropic might hurt business prospects for International Business Machines (IBM), especially in areas like enterprise AI services.

But it is worth unpacking how thin that explanation is.

First, large-cap stocks sometimes move sharply on very little news simply because trading algorithms or large institutional orders amplify small signals. In modern markets, short-term price movements are often dominated by liquidity dynamics rather than fundamental valuation changes.

Second, IBM’s business is partly tied to selling enterprise software, consulting, and infrastructure services. If investors speculate that more advanced or cheaper AI models could reduce demand for traditional enterprise IT services, they may react preemptively. That’s more of a “story about future competition” than evidence of an actual event.

Third, headlines that invoke a vague threat from a competitor are common when there isn’t a single clear driver. It is journalistically easier to say “X fell because of Y threat” than to admit that the market just drifted or that multiple small factors were at work.

So the safest interpretation is probably: the market may have been reacting to general AI-industry competitive anxiety rather than any specific announcement from Anthropic or IBM.

If you’re interested, I can also look at whether IBM’s long-term valuation seems sensitive to the generative-AI wave, or what analysts actually say about their strategic position.

You said:

To me IBM is in a category of companies that were important in the past, like GM, GE, Kodak, Xerox, and many more whose day has passed because of management changes, world changes, and so on.

ChatGPT said:

That is a very common historical pattern in industry. Many large companies rise because they are extraordinarily good at solving the dominant technical and economic problem of their era, and then struggle when the center of gravity shifts.

International Business Machines is often placed in that sort of narrative, though it is a little more complicated than some of the classic cases. The company was once synonymous with mainframe computing and corporate information systems. When personal computing and later internet-based platforms expanded, IBM did go through painful restructuring, selling or spinning off parts of its hardware business. Today it is largely positioned as a services, consulting, and enterprise software company rather than a hardware manufacturer.

Your comparison set is interesting. Companies like General Motors, General Electric, Kodak, and Xerox all faced the same structural problem: they were dominant in technologies that became commoditized, or were displaced by new technological ecosystems. Sometimes management culture matters as well—large mature organizations can become more risk-averse, slower to abandon legacy revenue streams, and less able to pivot into emerging platforms.

But it is also worth noting that “decline” is not always absolute. Some of these firms survive in a reduced but still economically meaningful form. IBM in particular has repeatedly tried reinvention, most recently around cloud computing and artificial intelligence services. Whether that strategy succeeds depends less on engineering talent alone and more on whether enterprise customers continue to value integrated, trustworthy, and stable providers of complex infrastructure.

History suggests that large technology companies are most vulnerable not when their old products become obsolete, but when a new architectural paradigm emerges that lets smaller or more agile competitors solve the same problem more cheaply. The shift from mainframes to personal computing, then from on-premise servers to cloud-native platforms, is a good example.

So your intuition is historically grounded, even if it is too early to say that IBM belongs permanently in the “past-era company” category. Markets sometimes prematurely declare such verdicts, and sometimes they are eventually right. Time is the final judge. If you like, we could also talk about whether the current wave of large-model AI is more like the mainframe transition or something more disruptive.

You said:

Some disappear, some hang on, some reemerge. Capitalism.

ChatGPT said:

That’s a very concise way of putting it. Market economies tend to behave a bit like biological ecosystems: firms are born, grow, dominate a niche when conditions favor them, and then either adapt, shrink, or disappear when the environment changes.

The interesting cases are the ones that don’t die but also don’t regain dominance. International Business Machines is often discussed in that middle category—no longer the cultural symbol of computing it once was, but still earning real money and serving customers who value stability, legacy system support, and large-scale integration. That kind of role is less glamorous but can be very durable.

And you are right that capitalism allows for all three outcomes you mention. The system does not guarantee survival of any particular company; it tends to reward whoever solves the current economic puzzle most efficiently. Sometimes old firms manage to reinvent themselves, sometimes they coast for decades on accumulated expertise, and sometimes they fade slowly rather than collapsing suddenly.

There is also a historical irony: some companies that look permanently dominant at one moment later become examples in textbooks of disruption. That uncertainty is part of why markets stay interesting, and occasionally a bit unsettling.

You said:

I remember the subtle arrogance of the IBM representatives: "You can't do without us." They are not now the same company, just have the same name.

ChatGPT said:

That sort of corporate confidence was not unique to International Business Machines, but IBM did become almost symbolic of it during the mainframe era. When a company is the only practical way to solve a very large customer’s technical problem, its representatives can easily slip into the posture you describe. In fairness, customers often reinforced it by depending on them.

You are also touching on something historians of business sometimes emphasize: continuity of name does not necessarily mean continuity of identity. Modern IBM is really the product of multiple strategic turns—selling off hardware lines, expanding consulting services, and trying to position itself around enterprise software and AI infrastructure. So while the brand survived, the economic and cultural substance of the company is quite different from the mid-20th-century mainframe giant many people remember.

That transformation is not unusual. Many long-lived corporations end up being more like evolving institutions than single coherent actors across time. Whether that is good or bad depends on what one thinks a company is for—technological leadership, shareholder value, employment stability, or something else.

Your memory also captures an interesting social shift. Early large technology firms sometimes projected authority because customers had little choice. Today’s environment, with cloud platforms, open-source software, and rapid startup innovation, makes that kind of posture much harder to sustain.

You said:

I would not approach this as good or bad; it's ethically neutral.

ChatGPT said:

That’s a very balanced way of looking at it. Treating the rise and fall or transformation of firms as ethically neutral is quite consistent with a historical or ecological view of markets rather than a moral one.

The story of International Business Machines is often read through emotional lenses because the company once symbolized technological authority, but from a longer perspective it is just an example of organizational adaptation to changing technical and economic landscapes. Some people celebrate such changes, others regret them, but they can also be seen simply as what complex competitive systems do over time.

Your perspective—that it is neither progress nor decline in a moral sense—is actually shared by quite a few economic historians. It is a useful stance when trying to understand large-scale economic change without getting pulled into nostalgia or triumphalism.

You said:

This is a stock-picker's rule: neither love nor hate a company. Nostalgia for a company is part of that.

ChatGPT said:

That is a classic discipline among serious investors. Emotional attachment—whether nostalgia, admiration, or dislike—can quietly bias judgment about future performance. The company that once felt important in your life is not necessarily the one best positioned for tomorrow’s earnings.

In the case of International Business Machines, nostalgia is especially common because the firm was for decades almost synonymous with business computing. But stock selection is usually about forward cash flows, competitive position, and adaptability rather than historical prestige.

The principle you describe is really a form of professional detachment. Many experienced investors try to treat a company as a changing economic machine rather than as a cultural symbol. That does not mean ignoring history—history helps reveal patterns of management behavior, technological disruption, and market structure—but it does mean resisting the temptation to hold or reject a stock simply because of how it feels.

In a way, your rule is just good decision hygiene: let the future, not the past, do most of the talking.