IBM cut its full-year forecast because the numbers looked bad. The company then announced it will fix everything with artificial intelligence. Specifically with a coding tool called Bob.
Bob. They named their productivity solution Bob. Not an acronym. Not a clever tech industry backronym where the B stands for Blockchain and the second B stands for Better Blockchain. Just Bob. The same name your uncle uses when he explains why he got fired from the post office.
The logic here tracks perfectly. Revenue disappoints. Investors get nervous. Solution: tell everyone you built a robot named like a guy who brings potato salad to the cookout. Wall Street will definitely buy that story. They bought everything else this year.
IBM's stock dropped after the warning. Retail traders who bought shares last month because "IBM seems solid" now own pieces of a company betting its turnaround on software with the same name as your high school gym teacher. Bob will improve productivity. Bob will write better code. Bob will somehow compensate for whatever structural problems caused IBM to lower guidance in the first place.
The press release probably tested well in focus groups. "AI" polls great. "Productivity improvements" sounds responsible. "Bob" makes it relatable. Put them together and you get a sentence that means nothing but sounds like a plan.
Somewhere in Armonk, an executive is explaining to shareholders why this quarter sucked but next quarter will rule because they taught a computer to debug Python. The computer's name is Bob. The shareholders are nodding. This is the system working exactly as designed.
Your portfolio is now dependent on whether Bob works better than whatever IBM was doing before Bob existed, which apparently wasn't working, which is why you're reading about Bob instead of reading about IBM beating estimates.
Photo by Carson Masterson on Unsplash
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