MW Why IBM plans to buy Confluent in its biggest deal since 2019

By Emily Bary

The technology giant announced its intent to acquire Confluent for $11 billion. It's a play on the data required for AI.

IBM's stock is dipping as the company plans a splashy deal.

International Business Machines is turning to a big-money acquisition as it looks to maintain an artificial-intelligence advantage.

The technology giant announced on Monday that it planned to purchase Confluent $(CFLT)$ in a deal valued at $11 billion. Shares of Confluent, which enables companies to manage and process data, were surging 27% in morning trading while shares of IBM $(IBM)$ were off more than 1%.

The Wall Street Journal reported over the weekend that a deal was close.

The combined company "will enable enterprises to deploy generative and agentic AI better and faster by providing trusted communication and data flow between environments, applications and APIs," or application programming interfaces, IBM CEO Arvind Krishna said in a release.

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Jefferies analyst Brent Thill could see the reasoning behind a deal, according to his note published before the official announcement. Confluent, he wrote, "addresses one of the most critical pain points in modern enterprise architectures: enabling low-latency data pipelines for AI, analytics and cloud-native applications."

That fits in with IBM's business, he added. Confluent's offerings "would complement IBM's hybrid cloud and AI-first strategy by providing a robust data-movement layer that accelerates AI adoption and operational intelligence across environments."

He noted that the deal would be IBM's largest since the 2019 acquisition of Red Hat, a maker of hybrid-cloud technology.

Evercore ISI analyst Chirag Ved, who covers Confluent's stock, saw parallels to that deal. Confluent "has certain similarities as a foundational, developer-led infrastructure layer with deep enterprise penetration and durable subscription economics, which IBM can integrate into its hybrid cloud and AI suite," Ved wrote ahead of the official announcement.

And fellow Evercore analyst Amit Daryanani, who follows IBM's stock, flagged that there's been "a fair amount of focus on IBM's narrative" for 2026, and namely the pathway to growth given that the company faces tough comparisons to the year-earlier period.

IBM said Monday that it expects the deal to close by the middle of 2026 and be accretive to adjusted earnings before interest, taxes, depreciation and amortization "within the first full year."

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-Emily Bary

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December 08, 2025 08:27 ET (13:27 GMT)

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