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IBM (NYSE: IBM) recently announced strong results for its third quarter. The company continues to grow through investments in generative AI.

IBM’s Financials

Revenues for the third quarter grew 4.6% to $15.75 billion, surpassing Street’s estimates of $15.73 billion. Adjusted earnings of $2.20 a share was ahead of the analyst estimates of $2.13.

By segment, revenues from Software that includes Hybrid Platform & Solutions and Transaction Processing grew 8% to $6.27 billion. Revenue from Consulting including Business Transformation, Technology Consulting, and Application Operations grew 6% to $4.96 billion, but was lower than the street’s estimate of $5.11 billion. Revenue from Infrastructure including Hybrid Infrastructure and Infrastructure Support fell 2% to $3.27 billion, but was lower than the estimates of $3.10 billion.

IBM expects to end the year with 3%-5% growth.

IBM’s Generative AI  

Recently, IBM announced the availability of the first models in the watsonx Granite series — a collection of models to advance the adoption of generative AI into applications and workflows. The standard contractual intellectual property protections for IBM products will apply to IBM-developed watsonx AI models.

These IBM models aim to help businesses scale AI and to be AI value creators. Businesses can bring their proprietary data to IBM base models and build a different model that is unique to their business and use those cases. For example, businesses can use them to apply retrieval augmented generation for searching enterprise knowledge bases to generate tailored responses to customer inquiries and deploy insight extraction and classification to determine factors like customer sentiment.

IBM also recently announced an investment of $235 million in Hugging Face, an open-source AI-accelerating technology innovation solution provider. IBM has a collaboration on watsonx to help enterprises build, deploy, and customize foundation models across multiple domains. Hugging Face community already offers pre-trained capabilities of Natural Language Processing (NLP) tasks including question answering, content generation and summarization, text classification, and extraction. These tools will be available to AI builders.

 IBM’s stock is currently trading at $143.76 with a market capitalization of $131 billion. It touched a 52-week high of $153.21 in November last year and a 52-week low of $120.55 in May 2023.

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