Shares in tech company International Business Machines (IBM) have faltered this year after a standout 2025 filled with growth. IBM stock is now down just 12% YTD, eating into the 80+% gains it’s seen since 2021. Fortunately, IBM may be on the verge of a rebound after its latest announcement this week, with a new generation of artificial-intelligence chips on the way.

IBM today unveiled what it called the world’s first sub-1-nanometer (nm) chip technology. “IBM’s new sub-1 nm chip packs nearly 100 billion transistors onto a chip the size of a fingernail, nearly twice the density of IBM’s 2 nm chip, unveiled in 2021,” the company said in a statement. IBM said the new chip will offer a substantial leap in capability, “supercharging compute for applications ranging from generative AI and cloud infrastructure to next-generation electronic devices.” The company estimates production of the chips in as early as five years.

IBM is positioning itself for growth in AI and cloud computing, supported by analyst upgrades and a bullish outlook on software performance. Earlier this week, JPMorgan analysts upgraded the stock from Neutral to Overweight, with analyst Brian Essex noting the company’s software business continues to “drive better recurring revenue, margins, profitability, and cash flow.”

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Furthermore, IBM has been on a spending spree in the past year, which has proven fruitful despite its stock’s decline. Last month, IBM stock surged after the Department of Commerce said it would contribute $1 billion to launch Anderon, a new standalone company to create a quantum chip foundry in Albany, N.Y. Meanwhile, IBM will also put $1 billion of its own cash into Anderon.