IBM Stock Forecast: IBM Watson Is Still The Best Long-Term Bet For Artificial Intelligence

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First.

IBM Stock Forecast


  • The Artificial Intelligence business is a nascent but fast-growing industry that could help IBM reverse its declining fortune.
  • IBM Watson still appears to be the runaway leader when it comes to cloud-based AI services. IBM’s $1 billion in Watson in 2013 is paying off.
  • Five years from now Watson might become IBM’s most important cloud-based revenue generator.
  • Automated multimedia editing are also tedious tasks that could benefit from Watson.
  • The Artificial Intelligence-powered algorithmic forecasts of I Know First recommend a Buy rating for IBM.

Please disregard the doom & gloom article at Seeking Alpha disparaging International Business Machines’ (IBM) Watson Artificial Intelligence product. It is true that IBM is not recruiting thousands of clients for its Watson platform. However, the enterprise Artificial Intelligence industry is still nascent. It will take more than three years before IBM Watson could get a fair evaluation. The cellular phone industry took decades to grow in to what is now a $425 billion global smartphone business.

The Cognitive Computing power of IBM Watson has multiple applications in the enterprise. It will ultimately become bigger than smartphones and computers.

IBM Stock Forecast

(Source: IBM)

Learned investors know that Watson is a technology differentiator for IBM that needs time to blossom to its full potential. Look on the bright side, IBM Watson gained 500 clients and 329 business partners (who resells Watson to other firms) since 2013 (based on the Seeking Alpha article).


(Source: IBM)

I am not bothered that IBM seems to be way behind its alleged 2016 target of 12,192 clients. Enterprise Artificial Intelligence is not a consumer product that needs a huge volume of clients to be considered successful. The more important issue is that IBM is really getting design wins for its Watson AI platform. We just have to assume that some of those 500 Clients listed are among the world’s Top 500 corporations.

Cisco (CSCO) is a Fortune 500 firm that is using Watson Artificial Intelligence for its hardware edge routers and cloud software products. Macy’s is another Fortune 500 firm that’s taking advantage of Watson to help improve the shopping experience of people. Advertising giants like Conde Nast is also using IBM Watson to find social media celebrities who could be most effective brand/advertising influencers.

IBM invested $1 billion in 2013 to make Watson an early-bird leader in Big Data & Analytics. Watson winning 500 clients and 329 business partners is a small step forward toward the projected multi-billion opportunities in Artificial Intelligence-driven Big Data analytics. In my estimate, the full economic potential of Watson will only be fully realized five years from now. Predictive Big Data analytics, where Watson excels, is predicted to become a $60.91 billion/year industry.

IBM Stock Forecast


The most important thing right now is that Watson remains the best product for cloud-based, enterprise-grade Artificial Intelligence services. Amazon’s (AMZN) Alexa is a far second when it comes to enterprise adoption. Microsoft (MSFT), Apple (AAPL), and Google (GOOG) are all lagging behind IBM when it comes to Business Intelligence and Big Data Analytics.

Base on Gartner’s 2016 Quadrant chart below, IBM is second only to SAP (SAP) when it comes to Business Intelligence and Advanced Analytics.


(Source: Gartner)

Let Watson Grow Up and Learn All The Skills

Investors should allow IBM Watson more time to gain all the skills that would make enterprise customers appreciate it more. There are thousands of applicable industrial tasks where IBM Watson could be trained and improve the overall productivity of companies and individuals. Artificial Intelligence will be monetized through robots, autonomous cars, financials, medical, sports, and entertainment.


I am a seasoned video editor so I greatly appreciate the algorithmic-perfect video editing capability learned by IBM Watson. The cognitive or human-like deep learning capability of IBM Watson is again highlighted by how quickly it learned how to help making a perfect trailer for a Hollywood horror movie about Artificial Intelligence.

IBM Watson got trained by watching and analyzing 100 horror movie trailers to help 20th Century Fox create a trailer in the span of 24 hours. It usually takes 10 to 30 days for professional video editors to create a movie trailer acceptable to movie producers/directors. This achievement is another evidence that IBM Watson’s commercial purpose is beyond mere natural language processing and Big Data analytics.

IBM Watson can also be trained to help humans accelerate their tedious daily tasks by as much as 10x. Video editing is one of the most time-consuming and monotonous duties. In my case, I would love to pay for a retail subscription version of IBM Watson. I need it to fast-track my wedding/birthday video editing jobs from 3 hours down to just 20-30 minutes.


Long-term investors who are interested to make money in the coming bonanza of Artificial Intelligence should add IBM to their portfolios. Watson is currently the leader in enterprise Artificial Intelligence services. It is always safer to bet on the horse that is already distancing itself from the pack.

I Know First’s Artificial Intelligence-powered stock market forecasting algorithm also shares my Buy rating for IBM. If I could trust IBM Watson to create an algorithmic-perfect movie trailer, I certainly trust the favorable trend signals for IBM that I Know First gave me. Watson makes IBM a a buy-and-hold forever ticker.

IBM Stock Forecast