IBM Launches New AI Models To Compete With Nvidia & Microsoft

The International Business Machines Corporation (IBM) released the latest version of its artificial intelligence models catered towards businesses. The move by Big Blue looks to jump on the ongoing AI train amid a surge of interest in the artificial intelligence industry. Currently led by tech powerhouses Nvidia (NVDA) and Microsoft (MSFT), IBM is hoping to compete in the further developing AI world.

“Granite 3.0” models will be made open-source, similar to other versions in IBM’s Granite family of AI models, according to IBM. Additionally, IBM offers a paid tool called Watsonx that helps run models inside data centers after they have been customized. Currently, rival Microsoft charges customers for access to their models.

Furthermore, some variants of the new Granite models are available starting Monday for commercial use on the Watsonx platform. A selection of these models will even be available on Nvidia’s stack of software tools that enable businesses to incorporate AI models.

IBM AI to Boost Competition Against Microsoft and Nvidia?

IBM has had a record year, surging 70% in the last 12 months. Its Q3 earnings report will be revealed on Wednesday, and could further boost or hurt stock performance based on performance. Analysts polled by FactSet project that IBM will post adjusted earnings of $2.22 per share for its September-ended quarter, up 24% from the same quarter a year earlier. Analysts project sales will rise 2.2% to $15.08 billion.

Jefferies analysts, meanwhile, have a neutral hold rating for IBM stock. But Jefferies analyst Brent Thill raised his price target to 245 from 200 in a client note Monday. “With IBM rallying into the print, expectations will be heightened, particularly around the software and AI narrative,’ Thill wrote. “From the top-down, IBM remains a slow-moving vessel weighed down by consulting/infrastructure.”

Competing with Mag-7 member Microsoft and rising power Nvidia is a tough matchup for Big Blue. However, the company’s software division continues to outperform expectations in 2024. Riding the AI wave this year has helped the company tremendously, in turn boosting investor confidence. Overall, analysts remain mixed on IBM stock despite the recent rally. Of the 22 analysts following the company, 10 rate stocks a buy or equivalent, according to FactSet. Seven analysts are neutral and 5 rate the stock a sell.