International Business Machines (IBM) is reportedly in advanced talks to acquire Confluent (CFLT) in a deal valued at about $11 billion, according to the Wall Street Journal. The potential deal would represent one of IBM’s largest acquisitions in recent years, substantially expanding its data infrastructure and real-time data capabilities to support its cloud and AI initiatives.
TipRanks Cyber Monday Sale
- Claim 60% off TipRanks Premium for data-backed insights and research tools you need to invest with confidence.
- Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off
CFLT shares are rallying 32% in pre-market trading at the time of writing. As of Friday’s close, Confluent had a market capitalization near $8 billion, suggesting IBM could be paying a roughly 37.5% premium over the stock’s pre-announcement value. The deal, if it proceeds, could be announced as soon as today.
Why Is IBM Buying Confluent?
If completed, the acquisition would give IBM a deeper, real-time data streaming capability to complement its hybrid cloud and AI strategy. Confluent’s platform is designed to manage real-time data streams used by large AI systems, which could enhance IBM’s analytics, enterprise cloud services, and data integration for major clients.
Reuters had reported in October that Confluent was considering a potential sale and had engaged an investment bank to manage the process, after attracting interest from potential buyers. Around the same time, IBM reported sluggish growth in its core cloud software business for the fiscal third quarter, raising questions about the pace of IBM’s overall expansion. Analysts indicated that IBM would need stronger software performance to sustain the broader growth trajectory.
The interest in Confluent underscores a broader rush for data-infrastructure assets driven by the push to advance generative AI. In May, Salesforce (CRM) agreed to buy Informatica for about $8 billion to strengthen its AI-enabled data capabilities.
IBM’s Competitive Landscape and Positioning
The potential deal would position IBM against major hyperscalers such as Microsoft Azure (MSFT), Google Cloud (GOOGL), and Amazon Web Services (AMZN), all of which are expanding AI and data-management offerings.
Beyond its AI ambitions, IBM has been exploring quantum computing initiatives, competing with companies like D-Wave Quantum (QBTS) and Rigetti Computing (RGTI). A deal with Confluent could shape how IBM weaves streaming data into its broader technology roadmap, including in quantum tech.
Is IBM Stock a Buy, Hold, or Sell?
Analysts remain divided about IBM’s long-term outlook. On TipRanks, IBM stock has a Moderate Buy consensus rating based on nine Buys, five Holds, and one Sell rating. The average IBM price target of $300.58 implies 2.4% downside potential from current levels. Year-to-date, IBM shares have surged nearly 44%.
