Can IBM's Together AI Cloud Deal Boost Its Growth Prospects?

International Business Machines Corporation IBM has entered into a multi-year, $240 million agreement with Together AI to support the growing demand for enterprise artificial intelligence (AI) inference. The partnership will enable IBM to expand its cloud infrastructure offerings for open-source AI workloads and strengthen its position in the rapidly growing AI infrastructure market.

Under the agreement, the company plans to deploy a large cluster of NVIDIA Corporation’s NVDA HGX B300 systems on IBM Cloud and provide Together AI with enterprise-grade cloud infrastructure powered by NVIDIA’s advanced computing and Spectrum-X Ethernet networking technologies. The deployment is designed to support high-performance AI inference and make large-scale workloads more cost-effective.

The collaboration also expands IBM’s broader relationship with NVIDIA across AI infrastructure and software. The companies are advancing solutions in GPU-accelerated data analytics, unstructured data processing, hybrid cloud infrastructure and consulting services. These capabilities are expected to help enterprises deploy AI workloads across cloud and on-premises environments with greater performance, flexibility and scalability.

Increasing investment in next-generation AI infrastructure is likely to create new opportunities for IBM as enterprises expand their AI spending. The deal could help the company expand its customer base and generate long-term revenues.

How Are Competitors Advancing?

IBM faces competition from Microsoft Corporation MSFT and Amazon.com, Inc. AMZN. Microsoft is expanding its AI capabilities with new features in Copilot. The company is preparing its next-generation Maia 300 AI chip to strengthen its AI infrastructure and reduce reliance on other chip suppliers. Microsoft continues to invest in AI across Windows, Microsoft 365 and Azure to help businesses and developers work more efficiently.

Amazon is strengthening its AI services through Amazon Web Services with new models, chips and cloud tools. The company is helping businesses build AI applications faster with services such as Bedrock and SageMaker. Amazon is investing heavily in data centers and AI infrastructure to meet growing demand.

IBM’s Price Performance, Valuation & Estimates

IBM shares have lost 0.5% over the past year against the industry’s growth of 190.8%.

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From a valuation standpoint, IBM trades at a forward price-to-sales ratio of 3.07, below the industry average of 5.32.

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Earnings estimates for 2026 have declined 0.2% to $12.33 over the past 60 days, while the same for 2027 have decreased 1.4% to $13.23.

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IBM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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