Forget punch cards, forget Charlie Chaplin selling PCs. Forget ThinkPads. All that was sold off years ago. IBM, the company that turned the personal computer and the laptop into household items, has reinvented itself as an AI consulting company, and its stock is booming. Still part of the slower and sturdier Dow Jones Industrial Average (it makes mainframes and quantum computers), IBM’s shares are up 20% this year, while the Dow is down half a point since January 1.

How did that happen? Under CEO Arvind Krishna, IBM has become one of the top consulting firms helping companies adopt generative AI, and a key to its success has been managing its clients’ data storage in so-called hybrid storage, partly in the cloud and partly on physical desktops and local servers.

“Our strategy continues to build upon the two technological foundations of AI and hybrid cloud, which clients need to unlock the full value of their data,” Krishna told shareholders in a letter in January. Last year, the company had revenue over $62 billion, and to date IBM reports it has booked nearly $6 billion in consulting agreements to help companies adopt AI.

“Arvind, he’s in the process of doing a Microsoft-like transformation,” Wedbush analyst Dan Ives told Business Insider this month. “It’s still the first inning in a nine-inning game.” The first big step was the acquisition in 2019 of cloud services provider Red Hat. The company is also doubling down on computer manufacturing, with a planned $150 billion investment in IT and manufacturing in the U.S., including a $30 billion investment in research and development of mainframe and quantum computers. Most of them are built at its plant in Poughkeepsie, New York. IBM says that more than 70% of the world’s transactions by value run through the IBM mainframes manufactured in the U.S.

IBM’s other big idea, driving revenue and its share price, is that it’s helping clients navigate the unfamiliar world of AI at a moment when many companies see AI as make-or-break. Mindful that many of its clients are already comfortable using different vendors, Krishna outlined what could be called the interstitial approach: taking clients’ existing software stacks and upgrading their AI capabilities to let them build their own agents for untapped use cases—with IBM’s help. “We help our clients integrate. We want to meet them where they are,” he told Reuters in an interview last week.

“While the company has not always been known for being on the cutting edge of innovation, we think it has positioned itself well to serve the needs of enterprises in search of IT infrastructure upgrades, consulting services, and hardware,” Morningstar analyst Eric Compton wrote in a recent note.

Watch Big Business This Week on Cheddar—and YouTube!The Usual Suspects

• Luigi’s revenge: UnitedHealth Group, the parent company of insurer UnitedHealthcare, has brought its 72-year-old former CEO, Stephen Hemsley, back to the corner office after booting CEO Andrew Witty this week, following a disastrous run of missed earnings, federal investigations, the shooting of the CEO of its insurance arm, and a 35% collapse in share price over four weeks that wiped about $190 billion off its market cap. That’s probably not the change that accused murderer Luigi Mangione was aiming for when he allegedly shot UnitedHealthcare CEO Brian Thompson to death on a midtown Manhattan sidewalk in December. But it’s putting the sprawling healthcare company’s problems back in the spotlight. In a call with analysts and investors this week, United said healthcare costs were rising much faster than it had expected. That caused shares to drop another 17% this week, putting them down 48% in the past month. The company is vastly profitable, with a 27% return on equity in the first quarter, but medical costs are rising far faster (7.3% in 2023) than the economy is growing, and Thompson’s murder has made it a lot harder to raise profits by denying coverage. Then Wednesday night, news broke that the Justice Department has been investigating UnitedHealth for possible Medicaid fraud. “Any potential recovery will be long and painful,” wrote BreakingViews columnist Robert Cyran.
• It’s their kind of town: United and American are battling each other with a lawsuit, snarky billboards, and social media campaigns as they compete for business travelers. United’s headquarters is in Chicago, and American has just sued the city, which runs O’Hare Airport, the fourth-busiest in the U.S., over what it claims is an effort to hand over landing slots and gates to United and push American out of town. United says American shouldn’t have neglected Chicago for so many years. A giant billboard leading to the terminal housing United says “Chicago’s #1 Airline,” with an arrow pointing onward that says “The Rest.”
• Hello, Federal! Amazon has a new bestie, and it’s FedEx. After UPS said it wasn’t making enough money delivering Amazon packages, Jeff Bezos’s mail-order kingdom struck a deal with rival FedEx for those last-mile deliveries. Terms of the deal were not announced, but Amazon delivers about two-thirds of its package through its own delivery system and local drivers.
• Bye-bye, Bill: Universal Music Group’s board of directors is saying goodbye to corporate agitator and human chatbot Bill Ackman, who says he’s leaving the record label’s board to spend time on other properties of his Pershing Square Holdings. The move comes after Ackman failed to persuade the Amsterdam-listed company to list its shares in the U.S.
• Apple up: Apple may raise prices on its smartphones in the next few months, in an effort to maintain its robust profit margin, which hit a record 46.9% in Q1. The Wall Street Journal reports that Apple wants to keep those fat margins, which keep its share price high, but doesn’t want to blame Trump’s tariff turmoil, which has put a tax of about 30% on iPhone imports from China. Already, it’s shifted much of its iPhone manufacturing to India for phones sold in the U.S. CEO Tim Cook said earlier that the tariffs would cost the company $900 million in the second quarter alone.

Car Talk

• Chalk up another big loser to Trump tariffs and upstart Chinese EV makers. Japan’s Nissan says it lost more than $4.5 billion and will cut 20,000 jobs over the next four years. The culprits— Trump tariffs are savaging projected U.S. sales, and Chinese drivers are moving to EVs, mostly locally made.
• Chinese internet giant Baidu, which also happens to make a self-driving robo-taxi, is planning to test its cars, which are already working in some Chinese cities, in Switzerland.
• In Washington, now that Elon Musk has left town, the House of Representatives is planning to cut U.S. subsidies for EVs, including the big $7,500 tax credit for new EVs. Starting next year, it will only be available for firms that have sold fewer than 200,000 EVs. Tesla alone sold 1.79 million EVs in 2024. That could hit Ford and General Motors, which have both only recently invested in EV production.

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Boeing’s Back, Baby!

• Not only is Qatar giving Donald Trump a $400 million Boeing 747 to use as a substitute for Air Force One, the Gulf petrostate has also ordered $96 billion worth of airplanes and jet engines from Boeing and GE Aerospace. The order includes up to 210 Boeing 787 Dreamliner and 777X planes. And Boeing stands to make a few hundred million more if Qatar delivers that 13-year-old 747.Three aviation experts who spoke to NBC News estimated it would cost more than $1 billion to refit the luxury jumbo jet as a nuclear-shock-secure flying fortress for official presidential use, and it’s unlikely the work would be finished before Trump leaves office.
• After China jolted Trump into dropping his tariffs on the country from 145% to 30%, Beijing told Chinese airlines they could resume taking deliveries on pre-ordered Boeing jets. Boeing had been stuck with some jets that had been flown back from China to avoid duties.
• A day after the U.S. and Britain announced they’d agreed to lower mutual tariffs, British Airways parent company IAG said it would spend $13 billion on 32 new Boeing jets for delivery by 2033 (along with 21 planes from Airbus).

Cable News

• Disney’s ESPN is launching a streaming service called—wait for it!—ESPN, that will bring subscribers most of the content from—you’ll never guess!—ESPN. And it’s yours for $29.99 a month ($35.99 if you bundle in Disney+ and Hulu). The package is aimed at sports fans who have cut the cable, and follows the failure earlier this year of Disney, Fox, and Warner Bros. Discovery to launch a joint live-sports channel called Venu Sports, after antitrust regulators objected. It comes as Paramount and Comcast are beefing up their sports streaming packages to reduce cable subscriber churn.
• Meanwhile, Warner Bros. Discovery has decided to rename Max as HBO Max, which is what it was called prior to May 2023.
• Also meanwhile, Fox says it will launch a streaming service called Fox One that would combine the company’s TV shows, cable channels and broadcast network, including National Football League games. Fox chief Lachlan Murdoch didn’t say what the cost would be.

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Elon’s World

• Cashing in—or cashing out? Tesla board chair Robyn Denholm made $198 million selling her Tesla stock as profits fell and Elon Musk was away in Washington, taking his chainsaw to the U.S. government. In March, after a steep drop in Tesla’s share price, Musk told employees to “hang on to your stock.” But Denholm’s made a career of cashing out her stock options, amassing profits of more than $530 million since she took over as chair in 2018, according to an analysis by the New York Times. As the paper notes, “The share sales raise questions about Ms. Denholm’s confidence in Tesla’s prospects.” Welcome to the club, Robyn. Tesla shares are down 20% since Trump took office, though they had been down as much as 47%.
• Pay back? Denholm and fellow board member Kathleen Wilson-Thompson are on a new Tesla board committee to come up with a new pay package for Musk, after a Delaware court last year ruled the $50 billion-plus he was awarded in 2018 was invalid. Musk and the board are still appealing that ruling.
• Stating the obvious: The State Department has been putting the screws on African countries to sign up for Musk’s Starlink service. According to a blockbuster report by ProPublica out this week, U.S ambassador Shannon Cromer made a veiled threat to cut off aid to Gambia unless the country agreed to give Starlink a license in the country. “The implication was that they were connected,” a senior Gambian bureaucrat told ProPublica.
• Is Boring betting big again? Musk’s troubled tunnel-digging firm, The Boring Company, is in talks with the Federal Railroad Administration on digging a tunnel for Amtrak trains traveling between Baltimore and Northern Virginia, the U.S. Department of Transportation said. The Boring Company once promised a hyperloop tunnel from New York to Washington, and a 35-mile underground loop for cars between Baltimore and Washington. Neither of them materialized.

The Short Stack

• If the shoe fits: Dick’s Sporting Goods is near a deal to buy sneaker emporium Foot Locker for $2.3 billion, or $24 a share, a nearly 90% premium on its closing price of $12.87 on Wedensday. Foot Locker has been struggling with online shopping and now tariffs cutting into its margins. It’s got some 2,400 shops in 26 countries. It’s not clear what’s in it for Dick’s, which already sells sports shoes in shopping-mall megastores. Foot Lockers are a tenth the size or less of a Dick’s, and many are in urban areas. Shares in Dick’s have been down about 8% this year. They fell 5.8% in aftermarket trading once the deal was announced.
• Perplexing valuation: The AI-powered answer engine Perplexity, which is taking a slice out of Google’s search business, is in talks for funding that would value it at $14 billion, a 50% increase from what it was worth at the last funding round in November. Perplexity is planning to launch its own web browser, called Comet, which would compete with Google.
• Button up: Famed English trench-coat maker Burberry is planning to cut 1,700 jobs around the world, as demand for luxury goods declines amid global tariff-led uncertainty. Burberry’s own sales dropped 6% in the quarter ending in March from last year, and 12-month profit margins dropped to 0.1% from 14.1% a year ago. The company is refocusing on its traditional British image with a campaign dubbed “It’s Always Burberry Weather,” which includes a focus on the Lunar New Year for the all-important Asian market. Surprisingly, Burberry still makes all its trench coats at a factory in England. Shares rose 17% on the news.
• The power of thought: Energy producer NRG says it will buy 18 natural-gas-powered generating stations from LS Power for $12 billion, doubling its generating capacity in Texas and along the East Coast as AI-powered data centers promise to multiply demand for electricity. An AI-powered web search can use 10 times the power consumed by a typical Google search. In January, Constellation Energy agreed to buy Calpine for $16.4 billion. Constellation is the largest nuclear power producer in the U.S., and Calpine is one of the largest generators of electricity from natural gas and geothermal sources. NRG’s stock is up 65% since January.
• Make mine black: It’s not just the coffee that’s black at Starbucks. A new company policy says baristas must all wear black shirts. And that’s got those free-spirited employees venti-ing. Workers in more than 50 unionized stores in Wisconsin, Florida, and Pennsylvania have walked out to protest the changes. “Why should the focus be on us paying out-of-pocket for new shoes, pants, and shirts when Starbucks could be focusing on staffing their stores correctly, lowering wait times, and paying baristas a living wage,” Starbucks Workers United said in a post on Instagram.

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Trumplandia

• GD Culture Group, a $26 million tech company with operations in China, says it has reached agreement with investors to sell shares to acquire $300 million of cryptocurrency, including Donald Trump’s memecoin. Crypto sales by groups linked to Trump open the door for businesses and foreign governments to influence U.S. policy. The $TRUMP memecoin rallied in April after an announcement that the top 220 holders of the coin would be invited to dinner with the president. $TRUMP has a market value of almost $3 billion.
• Trump son-in-law Jared Kushner’s plan to open a $500 million Trump-branded luxury hotel in the Serbian capital Belgrade has hit a roadblock. The head of Serbia’s historic landmarks agency admitted that he’d forged a government document allowing the former Yugoslav Ministry of Defense headquarters in Belgrade to be demolished and replaced with the Trump hotel. Kushner owes the potential for his hotel to an aggressive urban renewal project led by then-U.S. President Bill Clinton. In advance of the NATO bombing of Serbia during the Kosovo War of independence, a U.S. cruise missile hit the Ministry of Defense, destroying it. Another missile hit the Chinese Embassy, which was allegedly sharing satellite intelligence with Serbia’s military.
• A bevy of top U.S. business leaders joined Trump on his trip to the Middle East, including Nvidia’s Jensen Huang, Sam Altman of OpenAI, Larry Fink of BlackRock, Andy Jassy of Amazon, Dara Khosrowshahi of Uber, Alex Karp of Palantir, and Kelly Ortberg of Boeing. What did they get? Well, it’s not clear which deals were actually made independently of the Trump trip, and while the White House announced $600 billion in deals, the numbers add up to about half that. Here are highlights of what they brought back:
• • $142 billion in defense contracts, involving over a dozen U.S. firms.
  • A deal for Nvidia to sell about 18,000 of its latest chips to Saudi AI start-up Humain, a deal with as much as $15 to $20 billion over several years.
  • AMD will sell about $10 billion worth of processors to Humain
  • $80 billion worth of investments by Google, Oracle, Uber, and others in “cutting-edge transformative technologies in both countries”
  • $14 billion of gas turbines by GE Vernova
  • $96 billion of Boeing airplanes and GE jet engines
  • $20 billion of promised investment by Saudis in U.S. AI data centers
• The Trump sons are growing their bitcoin empire, now announcing that American Bitcoin will merge with a publicly traded company, Gryphon Digital Mining, that’s already listed on the Nasdaq. That follows a move by Eric and Donald Trump Jr. to merge American Bitcoin with Hut 98, a bitcoin mining firm.
• Donald Trump promised he’d bring down drug prices, and last weekend said he was going to sign an executive order to do just that. “Prescription Drug and Pharmaceutical prices will be REDUCED, almost immediately, by 30% to 80%,” he posted on Truth Social. In the end, the order was just a plea for drug companies to bring down prices, and nothing happened. Noting that Trump’s proclamation lacked any teeth, “I would not anticipate drug prices to come down in the near future,” Stacie Dusetzina, who studies drug pricing at Vanderbilt University, told the New York Times.

Business Is Tariffic

• After planning to eliminate the de minimus exemption, which created today’s fast fashion market and let Chinese firms like Temu and Shein pay zero customs duties on direct shipments to U.S. consumers of goods worth less than $800, Trump is now simply scaling back the tariff on small packages from 120% to 54%. That may still be too much to make China’s quick ship sellers happy. Some 1.36 billion shipments entered the U.S. under the de minimus exemption last year, up from 637 million four years earlier.
• Sony said tariffs will knock nearly $680 million off its profits this year, causing the company to ship only 15 million PlayStation 5s this fiscal year, down from 18.5 million last year.
• And the World Travel and Tourism Council said the U.S. is on track to lose $12.5 billion in international travel spending this year, falling to less than $169 billion from $181 billion in 2024. Canadians and Mexicans are making deep cuts to U.S. travel plans, and many other tourists are afraid of getting arrested by ICE, the council said.

On Monday, Trump walked back the 145% tariffs on Chinese imports, as Treasury Secretary Scott Bessent agreed with his Chinese counterparts in Geneva to knock them down to 30%, with China cutting many of its reciprocal tariffs as well, for the next 90 days. That leaves the U.S. with an effective tariff rate of 39% on Chinese imports and it made the stock markets so happy that the Dow recovered about half of what it had lost since Trump took office, closing Wednesday down 4.5% since Trump was inaugurated. The problem, of course, is that while this changes everything, in fact nothing has changed at all. Inflation hasn’t cooled (prices were still rising at an annual rate of 2.3% in mid-April), oil may have dropped to $56 a barrel last month, but now the benchmark Brent Crude is back up over $64. And as far as the tariffs go, most of them had been in place for less than two weeks, so leaving aside China, we have yet to see the real impact. Then there’s the point that none of the tariff deals Trump has crowed about have actually been signed, and the biggest negative knock on the economy, Trump’s unpredictability, shows no sign of slowing down.

That’s a problem everywhere. The head of the Port of Los Angeles, Gene Seroka, told the Wall Street Journal that the 90-day standdown won’t bring back trade. “Even at a 30% tariff with a 90-day reprieve, it’s not going to dramatically change what we’re seeing right now,” Seroka said. The reason? With 30% tariffs, that’s far more than the profit margin on most goods, and few retailers want to pay that much extra to import goods they may not end up selling. Bessent says the U.S. and China do not want to “decouple,” and says he believes they can kiss and make up, with a “long-lasting and durable trade deal.”

So, where does this leave us? Tariffs are restricting aggregate supply, and that tees us up for a serious bout of stagflation and a 1970s-style economic disaster, Daniele Tavani, chair of the economics department at Colorado State University, wrote in a recent note on LinkedIn. If stagflation does occur, lowering rates to reduce unemployment will just add to inflationary pressures, so the Fed will need to keep rates high or even raise them. But that, of course, will create unemployment.

“Trump will blame the Fed, while the fault lies with his tariff policy,” wrote Tavani. “If he does not back down on tariffs, and unemployment is high because of contractionary policy, he will appoint a new Fed chairperson next year, when Powell’s term ends, with strong political pressure to lower rates.” And that will push up inflation, a disastrous remake of the Ford-Carter crisis in the 1970s caused by the OPEC oil embargo. “Then, the supply shock was external (an energy crisis),” said Tavani. “Today, it is entirely self-inflicted.”

Last thing I’ll say on trade before I hit the gym: We literally went from predictions of millions of people screwing in little screws, tariffs will plug the $2 trillion budget deficit and pay for no tax on tips, plus you can live with 2 dolls instead 30 to “let’s make a deal with…

— Charles Gasparino (@CGasparino) May 14, 2025