IBM acquired a significant stake in Together AI for $240 million, backing the neocloud inference provider in a major strategic partnership.
International Business Machines (IBM) has announced a $240 million deal with Together AI, a private neocloud provider founded in 2022, positioning itself as a significant player in the fast-growing neocloud market. Together AI, which recently raised $800 million at an $8.3 billion valuation, rents AI-computing capacity to businesses seeking to run, customize, and improve free, public AI models without purchasing costly hardware.
Under the partnership, IBM will provide Together AI with dedicated AI-computing capacity on IBM Cloud using next-generation Nvidia HGX B300 systems. The deployment is expected to launch during the first quarter of 2027. Rather than competing directly with industry leaders CoreWeave and Nebius, IBM adopts a wholesale "landlord" approach—building high-end graphics-processing-unit (GPU) clusters on IBM Cloud that Together AI leases in bulk and then packages and resells under its own brand to developers and open-source teams. This arrangement allows IBM to generate revenue from wholesale leasing, cybersecurity-services integration, and related software sales, including its Red Hat AI Factory stack.
The deployment represents a pivotal moment in IBM's AI strategy. Though IBM has traditionally thrived as a software provider and enterprise-technology expert, this entry into the neocloud sector demonstrates its commitment to capturing demand in a hypergrowth market. Together AI's platform currently serves approximately 400 trillion tokens per month, providing IBM significant AI-infrastructure exposure without requiring it to assume the risks of direct data-center operation in a capital-intensive, highly competitive, and relatively untested market.
Nvidia's role is central to the deal's success. The B300 infrastructure delivers up to 30 times the AI factory output of previous-generation systems, enabling Together AI to deliver high-speed output at scale and low cost. This agreement marks the latest expansion of IBM and Nvidia's partnership, initially forged in 2013 and broadened in March to encompass cloud and hardware integration, data and analytics optimization, consulting, and data sovereignty.
A substantial revenue gap is expected before IBM realizes financial returns. Nvidia's HGX B300 systems and associated networking infrastructure require months to ship, configure, and test, with deployment targeted for Q1 2027—approximately five to eight months after contract signing. Standard accounting rules further delay revenue recognition until the cluster goes live and Together AI begins processing compute tokens. However, IBM can count the $240 million as part of its total signings and IBM Cloud backlog. As of late June, IBM's generative-AI backlog totaled approximately $20.4 billion, representing roughly 30% of its overall backlog and demonstrating strong market demand for its services.
IBM stock showed modest movement following the announcement, rising 0.9% to $238.42 on August 11 before declining to $231.68 the next day and closing near $236. The company faces broader headwinds: IBM is down 19% year-to-date, with second-quarter total revenue up just 1% year-over-year—falling short of analyst expectations. Free cash flow for the first half of 2026 was flat compared to the prior year. The Infrastructure division particularly struggles, with revenue down 7% year-over-year and signature Z mainframe revenue plummeting 42%. Chaikin Analytics, the investment-research platform founded by Wall Street veteran Marc Chaikin, rates IBM as "neutral" on its Chaikin Power Gauge.
Nvidia received a pre-market boost of 1.5% on August 11 following the announcement, though the company's robust existing deal portfolio limits the relative impact. Nvidia's performance under this arrangement—particularly the success of the IBM Cloud deployment—may influence the company's near-term trajectory. Meanwhile, CoreWeave and Nebius, the world's largest publicly traded neocloud companies, experienced significant gains independent of this deal. Nebius jumped 34% from $193.23 to $259.20 following its strong second-quarter earnings report, while CoreWeave surged 19.3% from $90.32 to $107 after reporting that revenue doubled year-over-year in the second quarter.