Why would IBM spend $11 billion on a company most people have never heard of? The answer lies in something called real-time data streaming, which sounds boring but powers everything from Netflix recommendations to fraud detection at your bank.
Confluent is the company behind Apache Kafka, the world’s most popular open-source data streaming platform. Think of it as the invisible highway that moves data instantly between different systems. When you buy something online and immediately get a confirmation email while your bank balance updates, that’s data streaming at work.
Kafka serves as the invisible highway instantly moving data between systems that power modern digital experiences.
IBM agreed to pay $31 per share for Confluent in an all-cash deal expected to close by mid-2026. This represents a hefty 34-35% premium over Confluent’s stock price before the announcement, showing just how badly IBM wanted this technology. It’s IBM’s largest software purchase since buying Red Hat for $34 billion in 2019.
So why the big bet? IBM sees real-time data as the secret sauce for artificial intelligence. AI models need fresh, live data to work properly, not yesterday’s stale information. Confluent’s platform ensures data flows smoothly across different cloud services and company systems, which is exactly what AI applications crave.
Confluent already serves over 6,500 customers, including 40% of Fortune 500 companies. Their technology works across major cloud platforms like AWS, Azure, and Google Cloud, plus traditional company servers. This flexibility makes them incredibly valuable in today’s mixed-up tech world.
IBM plans to combine Confluent with its own AI platform called watsonx and other cloud products. The goal is creating a one-stop shop for companies wanting to use AI effectively. It’s like building a complete kitchen instead of selling just the stove. IBM expects the deal to be EBITDA-accretive in the first year and improve free cash flow by year two. The deal ensures Confluent’s key founders will remain in leadership roles to guide the integration.
The timing makes sense too. The real-time data streaming market is expected to double from $50 billion in 2021 to $100 billion by 2025, driven by AI demand. Tech giants are scrambling to control the data infrastructure that feeds AI systems. While Confluent doesn’t currently pay cash dividends to shareholders, the acquisition provides immediate returns for investors who held shares before the purchase announcement.
For IBM, this acquisition represents a major bet that whoever controls data streaming will win the enterprise AI race.
