Markets

Dow Jones News: Microsoft's JEDI Win Challenged; IBM Rolls Out Advanced Weather Forecasts

The stock market was buoyant on Friday, with the Dow Jones Industrial Average (DJINDICES: ^DJI) up 0.48% by 1:45 p.m. EST. Helping stocks along was a statement from White House economic advisor Larry Kudlow that expressed optimism that a U.S.-China trade deal was coming soon.

Shares of Microsoft (NASDAQ: MSFT) gained on Friday despite news that cloud rival Amazon (NASDAQ: AMZN) was planning to challenge a key cloud contract win for the software giant. International Business Machines (NYSE: IBM) was in the news as well, rolling out its new weather forecasting system worldwide.

Microsoft's $10 billion cloud win challenged

When the U.S. Department of Defense awarded Microsoft its controversial Joint Enterprise Defense Infrastructure (JEDI) cloud contract last month, worth as much as $10 billion over 10 years, it came as a big surprise to those who thought Amazon was the easy choice. Microsoft's win took an axe to the notion that Amazon was an unstoppable force in the cloud.

While Microsoft's win was a surprise, Amazon's reaction was not. The company said that it plans to file a lawsuit challenging the decision, alleging a variety of issues with the process. "Numerous aspects of the JEDI evaluation process contained clear deficiencies, errors, and unmistakable bias -- and it's important that these matters be examined and rectified," said Amazon spokesman Drew Herdener in a statement.

An electronic cloud.

Image source: Getty Images.

There's at least some chance that Amazon will succeed in stripping the win from Microsoft, which would be a blow to the software company's booming cloud business. While Amazon remains the leader in the public cloud infrastructure-as-a-service market, Microsoft has made great progress catching up. Its Azure cloud platform is growing quickly, posting 63% growth in the latest quarter.

Microsoft stock hasn't been affected by Amazon's imminent legal wrangling, a sign that investors don't see it as a particularly big threat. Shares of Microsoft were up 1% on Friday, bringing the year-to-date gain to a healthy 47%.

IBM launches advanced weather forecasting system

Shares of IBM were up 0.5% on Friday, rising along with the broader market. While there wasn't any earth-shattering news from the tech giant, the company did announce a new weather forecasting system that takes advantage of a key acquisition.

IBM announced on Thursday that its Global High-Resolution Atmospheric Forecasting system, or GRAF, was being rolled out globally. IBM acquired The Weather Company back in 2016, a big bet on big data. At the time, The Weather Company's cloud platform handled 26 billion inquiries each day, fueled by nearly 200,000 personal weather stations.

GRAF is capable of making weather forecasts at a resolution of 3 kilometers, compared to a typical 10-kilometer to 15-kilometer resolution for current systems. The system brings these refined forecasts to the entire planet, including areas where extreme weather is a significant risk. GRAF runs on a supercomputer powered by IBM's own POWER9 processors, as well as graphics processing units.

There are plenty of business use cases for IBM's advanced weather forecasting technology. The airline industry is one example, where weather forecasts can be used to optimize routes and minimize passenger inconvenience. "We are looking forward to seeing the results that the GRAF model will bring," said Steve Abelman, manager of weather technology for American Airlines, in IBM's press release.

While weather forecasting is a small part of IBM's overall business, using the new system will leverage many of the company's key technologies, including artificial intelligence, cloud computing, and data analytics. All of those are growth areas for IBM, critical for the company's return to consistent, sustainable growth.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Timothy Green owns shares of IBM. The Motley Fool owns shares of and recommends Amazon and Microsoft. The Motley Fool is short shares of IBM and recommends the following options: long January 2020 $200 calls on IBM, short January 2020 $200 puts on IBM, long January 2021 $85 calls on Microsoft, and short January 2020 $155 calls on IBM. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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