IBM has struck a $240 million agreement with an artificial-intelligence start-up to build a large AI cluster on its cloud, in the latest sign that the legacy tech giant is adapting to changing times.
Big Blue announced Tuesday that it had entered into a multiyear deal with California-based Together AI to add a cluster of Nvidia HGX B300 systems to IBM Cloud, launching in early 2027. Together AI will use the systems, which are tailored for advanced AI and high-performance workloads, to power its open-source model inference.
Inference -- the process by which trained AI models apply learned patterns to process new data and make decisions -- has become a major driver of computing demand, leading cloud providers and chip makers to spend billions on expanding AI infrastructure.
Together AI was last valued at $8.3 billion following an $800 million funding round in July 2026. The start-up allows enterprise customers to train open models, including China's DeepSeek and Kimi, and run AI workloads at lower costs than closed systems.
For IBM, the deal marks another effort to keep pace with the ongoing AI boom. Across its century-long history, Big Blue has repeatedly adapted through major waves of tech evolution and hype. Yet its latest earnings report raised fresh doubts about whether the company can truly thrive, as analysts flagged sluggish organic growth and shifting customer spending patterns.
Shares are clawing their way back from a historic selloff in July, which caused IBM to plunge 25% in a single day -- its worst drop on record. Concerns mounted after CEO Arvind Krishna said customers unexpectedly redirected quarterly budgets toward servers, storage, and memory to get ahead of expected price hikes.
The result was a drop in infrastructure revenue that was "worse than our expectations," Krishna wrote. Compounding the blow were declining sales of high-margin software -- used for tasks like banking and credit card payments -- along with a broader drop in hardware spending.
IBM is still trading sharply below its all-time closing high of $329.23, a record set at the start of June. Shares rose 1.4% to $239.65 on Tuesday.
Comments