AI Revitalizes IBM?
Is AI helping $IBM(IBM)$ get back on its feet? Absolutely!
The company is poised for solid organic revenue growth in its software and consulting divisions. Analysts believe IBM will continue to infuse AI capabilities across its business lines, especially in consulting.
While the current high-interest rate environment has posed challenges, there's optimism that IT consulting will rebound once the U.S. economy stabilizes.
Granite Foundation Models
In September 2023, IBM launched its Granite Foundation Models, designed to enhance AI technology for clients. These models are optimized for enterprise software development and can handle between 3 billion and 34 billion parameters across 116 programming languages.
For businesses, these ready-made AI models are far more cost-effective than larger alternatives, offering a practical solution for everyday AI training and inference tasks.
Additionally, in May 2023, IBM announced new features for Red Hat OpenShift AI, including deployment pipelines, model services, and monitoring. These enhancements leverage existing AI technologies like IBM WatsonX and Ansible Lightspeed, creating a more robust offering for clients.
Future Growth Potential
Fast forward to October 2024, and IBM released Granite 3.0, its latest AI model designed for businesses, featuring 8 billion and 2 billion parameters.
These AI investments are crucial for IBM. The capabilities of Red Hat OpenShift AI allow clients to run generative AI in hybrid cloud environments, with IBM providing the middleware, hardware, and software stack. This comprehensive solution sets IBM apart from competitors.
As a leader in the IT consulting market, IBM is well-positioned to accelerate growth in this sector. Advances in its internal AI models will help clients transition to the cloud and integrate AI applications.
Looking Ahead
While analysts remain optimistic about the long-term outlook, tight IT budgets may pose growth challenges. With high interest rates, many clients are cutting discretionary IT spending, impacting consulting revenue.
Despite current market weaknesses in consulting, investments in Red Hat OpenShift AI and internal AI models could drive future growth. As interest rates decline, the IT consulting sector is likely to thrive. IBM's strategic focus on AI could be the key to unlocking its potential in this evolving landscape.
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