International Business Machines Corporation (IBM) stock surged 5.03% in intraday trading on Wednesday, following the announcement of its upcoming z17 mainframe system launch in June. The new mainframe, featuring advanced AI capabilities, is expected to drive significant revenue growth for the company.

The z17 mainframe is powered by the IBM Telum II processor, which boasts an on-chip AI accelerator capable of processing 450 billion AI inferencing operations per day. This impressive capability, coupled with response times of around one millisecond, makes the system ideal for real-time applications such as credit card fraud detection during transaction processing.

Adding to the excitement, IBM plans to introduce the Spyre Accelerator in the fourth quarter of this year. This AI expansion card can be integrated into the z17, further enhancing its AI capabilities and allowing clients to utilize AI assistants and agents built on IBM's Granite models. This development brings generative AI directly to the mainframe, potentially opening up new revenue streams for IBM in the rapidly growing AI market.

Investors are particularly optimistic about the z17's potential to drive revenue growth. IBM's previous mainframe, the z16, was the most successful in company history, with its install base increasing by about 30% over its predecessor. Analysts expect the z17 to continue this trend, potentially surpassing the 88% year-over-year revenue increase seen in the first full quarter of z16 availability. Moreover, the new mainframe is anticipated to boost software and consulting sales, particularly in AI-related business, where IBM has already booked more than $5 billion worth of deals.

The z17 launch is a key factor in IBM's guidance for revenue growth of more than 5% this year, an acceleration compared to 2024. While challenges such as recent U.S. tariffs and potential economic slowdowns exist, the mission-critical nature of IBM's mainframes and the growing demand for AI capabilities are expected to drive strong adoption of the z17, supporting IBM's positive outlook for the year.