Confluent shares jump as IBM reportedly weighs $11B acquisition

Shares of Confluent surged nearly 28% in premarket trading on Monday after the Wall Street Journal reported that IBM is in advanced discussions to acquire the data-streaming platform for about $11 billion.

The potential deal, if finalized, would mark a significant push by IBM to strengthen its position in cloud services and capitalise on surging corporate demand for data infrastructure and artificial intelligence tools.

According to the report, an announcement could come as early as Monday, though the newspaper cited unnamed sources and said talks were ongoing.

Both companies did not immediately respond to requests for comment outside normal business hours.

Confluent, based in Mountain View, California, has a market value of roughly $8.09 billion, according to LSEG data.

IBM, by contrast, is valued at close to $288 billion.

The WSJ report follows an earlier Reuters dispatch in October stating that Confluent had begun exploring a potential sale after receiving interest from prospective acquirers and had engaged an investment bank to oversee the process.

Rising demand for data infrastructure drives consolidation

The interest in Confluent reflects a broader trend of consolidation across the data-infrastructure and enterprise-software sector.

Confluent’s platform, built on open-source technology, allows companies to process continuous streams of real-time data, a capability that has become critical as businesses scale up their AI and digital operations.

Demand for such tools has climbed sharply as companies race to deploy generative AI models and strengthen their data foundations.

In May, Salesforce agreed to acquire Informatica for about $8 billion, underscoring how large software providers are positioning themselves to serve the next wave of AI-driven corporate spending.

IBM, for its part, has benefited from optimism around its recent partnership with Anthropic, which will bring the AI startup’s models into IBM’s software ecosystem.

Confluent’s shares ended at $23.14 on Friday, while IBM’s stock has risen 40% so far this year amid expectations that its AI-aligned strategy will help sustain longer-term revenue growth.

IBM aims to reinforce cloud software performance

The reported talks come as IBM faces questions over the pace of growth in its cloud software operations.

In October, the company reported slower expansion in parts of its cloud segment, prompting concerns about its ability to maintain momentum following a strong run driven by interest in artificial intelligence.

IBM’s third-quarter earnings, however, exceeded Wall Street estimates, supported by gains in automation and transaction software.

Software revenue rose 10% to $7.21 billion, broadly in line with expectations.

Red Hat, the company’s hybrid-cloud unit however grew 14% year-on-year — a moderation from 16% in the prior quarter.

Analysts at Evercore ISI noted that while the deceleration in Red Hat was disappointing for some investors, the strength in IBM’s automation software business, aided by its acquisition of HashiCorp, could help offset slower cloud growth into the December quarter.

Chief Executive Arvind Krishna has centred IBM’s strategy on expanding its software footprint and capturing rising demand for cloud-based and AI-driven solutions.

Last year’s $6.4 billion acquisition of HashiCorp was widely viewed as a move to solidify IBM’s relevance in hybrid-cloud management and infrastructure automation.