AI Deal Alert: IBM To Acquire Confluent For $11 Billion. What Should Investors Know?

IBM (NYSE: IBM) wants to be an artificial intelligence (AI) powerhouse.

The tech giant is scooping up data-streaming dynamo Confluent (NASDAQ: CFLT) to add to its growing collection of AI-enablers.

Under the terms of the deal announced Monday, IBM will purchase Confluent for $11 billion in cash. That amounts to $31 per share, a premium of 34% compared to the stock's closing price on Friday.

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Confluent would bolster IBM's AI ambitions

Confluent's open-source platform helps businesses gather and analyze data from a wide variety of sources in real time. The data-infrastructure company is thus well-positioned to benefit from the explosion in generative AI applications, which rely on high-quality, dependable data feeds to operate effectively.

"IBM and Confluent together will enable enterprises to deploy generative and agentic AI better and faster by providing trusted communication and data flow between environments, applications, and APIs [application programming interfaces]," IBM CEO Arvind Krishna said in a press release.

Confluent already serves over 6,500 clients, including more than 40% of the Fortune 500. Key customers include cloud computing titans Amazon, Microsoft, and Alphabet, cloud data leader Snowflake, and AI model provider Anthropic.

"Data is spread across public and private clouds, data centers, and countless technology providers," Krishna said. "With the acquisition of Confluent, IBM will provide the smart data platform for enterprise IT, purpose-built for AI."

Confluent should boost IBM's free cash flow by 2028

The deal comes at a time when data-driven apps are experiencing explosive growth. IBM estimates that by 2028, global data usage will more than double as the AI boom expands and over one billion new applications come online.

To seize this opportunity, IBM has made moves to expand its cloud offerings. The software colossus acquired IT optimization specialist Apptio for $4.6 billion in 2023 and cloud automation provider HashiCorp for $6.4 billion in 2024. Adding Confluent to its budding cloud ecosystem would further buttress IBM's automation, data management, and consulting businesses.

Moreover, in addition to quickening IBM's revenue growth, an acquisition of Confluent is expected to boost the company's free cash flow by the second year post-closing. The transaction is projected to be completed by mid-2026, subject to shareholder and regulatory approval.

A muted reaction to the news could be an opportunity for investors

IBM's shares were up less than 1% as of 2:35 p.m. EST on Monday following the deal's announcement.

Yet a purchase of Confluent has the potential to accelerate IBM's AI-fueled expansion strategy, which has helped to drive the venerable tech stock's price sharply higher in 2025. IBM's shares have surged over 40% so far this year.

Joe Tenebruso has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, International Business Machines, Microsoft, and Snowflake. The Motley Fool recommends Confluent and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.