June 24, 2024

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IBM Unleashes a Flurry of AI Updates

3 min read

International Business Machines(NYSE: IBM) has found its footing in the AI market by focusing on enterprise customers with complex requirements. The company’s watsonx platform caters to companies and organizations that need to train, tune, and deploy AI applications while minding regulatory, legal, and other concerns.

This strategy is going well for IBM so far. The company has a book of business related to watsonx and generative AI that tops $1 billion, and this figure is growing with each passing quarter. Consulting rather than software accounts for the lion’s share of the AI business, positioning IBM to provide not only an AI platform but also guidance and help with implementation.

Striking partnerships left and right

IBM’s AI software doesn’t solely live on its own cloud platform. One of the core strengths of IBM’s business model is an agnosticism toward other technology vendors. IBM’s consulting arm is free to craft solutions that involve products and services from a network of strategic partners. These partnerships bring in billions of dollars worth of business that IBM likely wouldn’t win otherwise.

At its annual THINK conference, IBM provided a handful of updates regarding its watsonx platform and partnerships with other technology companies:

  • IBM open-sourced some of its advanced AI models used for code generation. These models were used to train IBM’s watsonx Code Assistant and Code Assistant for Z, the latter of which helps customers easily transform legacy mainframe code into a modern programming language.
  • IBM unveiled new AI assistants set to be available later this year. These include an assistant aimed at accelerating application development using the Java programming language and an assistant tasked with automating mainframe management.
  • IBM is partnering with Amazon Web Services to make the full watsonx platform available directly on AWS. Amazon SageMaker, a machine learning product on AWS, will be integrated with the governance portion of IBM’s watsonx platform. Joint IBM-AWS clients will be able to turn to IBM’s consulting arm for help leveraging both companies’ products.
  • IBM is teaming with Salesforce to bring watsonx to the Salesforce Einstein 1 Platform. IBM’s Granite AI models will be integrated with Salesforce’s platform, and IBM’s consulting arm is working to bring industry-specific prompt templates and copilot actions to the platform later this year.
  • The watsonx platform can now run on Microsoft‘s Azure cloud platform.
  • A strategic partnership with AI start-up Mistral is in the works, which will bring Mistral’s commercial AI models to the watsonx platform.

An enterprise AI leader

By working with other cloud platforms and technology providers, IBM is extending the reach of its watsonx AI platform far beyond what would be possible if the company instead took a walled-garden approach. Enabling watsonx to run anywhere should also drum up more business for IBM’s consulting arm.

IBM is emerging as a leader in the enterprise portion of the AI market. It will take time for AI to move the needle for IBM, but it has the potential to accelerate growth in the years ahead. With IBM stock trading for about 13 times free-cash-flow guidance, now looks like a great time to invest in the iconic technology company.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Timothy Green has positions in International Business Machines. The Motley Fool has positions in and recommends Amazon, Microsoft, and Salesforce. The Motley Fool recommends International Business Machines and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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