What if you bought IBM in 1990?
US Tech · Services. The hindsight answer, year by year, against the only benchmark that matters.
Could you have picked it? Play12.1× · S&P 500 same money: $19,429
$1,000 in IBM at the start of 1990 would be worth about $12,083 today. A plain S&P 500 index fund over the same years would have made more — the boring option won.
The story
IBM began the 1990s as the bluest of blue chips and promptly nearly fell apart, posting what was then among the largest losses in US corporate history in 1993 as mainframes lost ground to PCs. Lou Gerstner, brought in from outside, kept the company together and refocused it on services and software, and the shares soared through the late 1990s. In 2005 IBM sold its PC business to Lenovo, a fitting exit from the product it had popularised.
The 2010s were less kind. Warren Buffett bought a big stake in 2011 and later sold it at a loss, revenue shrank for years, and the heavily advertised Watson AI promised more than it delivered. IBM spent heavily on share buybacks, bought Red Hat for about 34 billion dollars in 2019 and spun off its infrastructure services unit as Kyndryl in 2021. A renewed focus on hybrid cloud, software and consulting around AI finally lifted the shares to new highs in the mid-2020s, after more than a decade of drifting.
The lesson: Buybacks cannot substitute for growth; IBM spent tens of billions shrinking its share count while revenue declined, and the stock went nowhere for years.
$1,000 invested at the start of each year
| Bought in | Price then | Worth today | S&P 500 would be | Multiple |
|---|---|---|---|---|
| 1990 | $24.00 | $12,083 | $19,429 | 12.1× |
| 1995 | $18.00 | $16,111 | $14,783 | 16.1× |
| 2000 | $110 | $2,636 | $4,626 | 2.6× |
| 2003 | $80.00 | $3,625 | $7,727 | 3.6× |
| 2005 | $98.00 | $2,959 | $5,763 | 3.0× |
| 2007 | $97.00 | $2,990 | $4,789 | 3.0× |
| 2008 | $108 | $2,685 | $4,626 | 2.7× |
| 2010 | $130 | $2,231 | $6,071 | 2.2× |
| 2012 | $185 | $1,568 | $5,312 | 1.6× |
| 2015 | $160 | $1,812 | $3,301 | 1.8× |
| 2018 | $154 | $1,883 | $2,519 | 1.9× |
| 2020 | $135 | $2,148 | $2,092 | 2.1× |
green = beat the S&P 500 · red = lost money
Best entry point in our set: 1995, turning $1,000 into $16,111. The S&P 500 from that same year: $14,783.
On this day
- 7 April 1964: IBM bets the company on System/360
- 11 May 1997: Deep Blue beats Kasparov
- 12 August 1981: IBM launches the personal computer
- 28 October 2018: IBM bets $34 billion on Red Hat
- 7 December 2004: IBM sells its PC business to Lenovo
Now try it without hindsight. The wheel decides the year and the asset class, you pick the position, ten seconds a pick, and we simulate to today. IBM is one of 258 positions on the wheel — including the ones that went to zero.
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