IBM buys Confluent for $11 billion, wants to gear up for AI

It’s a big deal, and of course it’s about AI: On December 8, 2025, IBM and Confluent signed a definitive agreement whereby IBM will acquire all outstanding shares of Confluent for $31 per share in cash. This corresponds to an enterprise value of $11 billion. The transaction will be financed from available cash and is expected to close by mid-2026, subject to regulatory approvals.

IBM brings a market capitalization of nearly $290 billion to the table. A purchase price of $11 billion for Confluent is quite substantial — only for Red Hat did IBM pay (significantly) more:

Strategic Significance for AI Infrastructure

With the acquisition, IBM aims to expand its position in the rapidly growing market for data-driven AI applications. Confluent offers a leading open-source platform for real-time data streaming based on Apache Kafka and is considered fundamental for deploying AI systems.

“IBM and Confluent will together enable enterprises to deploy generative and agentic AI better and faster by providing trusted communication and data flows across environments, applications, and APIs,” said Arvind Krishna, Chairman and CEO of IBM.

IBM was relatively early in the AI space with Watson (already featured in the legendary “Jeopardy!” quiz show in 2011), but has fallen behind Google, OpenAI, Anthropic, and others for several years. OpenAI and Anthropic are already valued higher than IBM in corporate valuations (at $300 billion and $500 billion, respectively).

CEO Kreps Sees Opportunity for Scaling

Jay Kreps, CEO and co-founder of Confluent, justified the decision in an internal message to employees with the opportunity for accelerated expansion. “Data is at the center of what enterprises need to do to leverage AI, modernize their operations, and develop the next generation of applications,” Kreps wrote.

He emphasized the strategic alignment: “IBM sees the same future we do: one where enterprises run on continuous, event-driven intelligence, where data flows freely and reliably across every part of the organization.” Through the merger, this architecture could be “made accessible to far more organizations, accelerating the shift to real-time and AI-driven operations globally,” Kreps said.

Open-Source Commitment as a Unifying Element

Kreps highlighted IBM’s long-standing support for open-source projects and pointed to previous acquisitions such as Red Hat and HashiCorp. “Our shared values of technological leadership, customer trust, and the conviction that data is fundamental to the next generation of AI are an important reason why I’m excited,” said the Confluent chief.

In his message to employees, Kreps assured: “Becoming part of IBM will not change Confluent’s mission; it will strengthen it.” Confluent will continue to operate as an independent brand and business unit within IBM even after the transaction closes.

Market Position and Financial Outlook

Confluent currently serves more than 6,500 customers across various industries, including over 40 percent of Fortune 500 companies. The company works with technology leaders such as Anthropic, AWS, Google Cloud, Microsoft, and Snowflake.

According to the company, Confluent’s total addressable market has doubled from $50 billion to $100 billion over the past four years. IBM expects the acquisition to contribute to adjusted EBITDA in the first full year after closing and to increase free cash flow in the second year.

The boards of directors of both companies have approved the transaction. Major shareholders of Confluent, who together hold approximately 62 percent of voting rights, have contractually committed to voting in favor of the acquisition. The transaction still requires approval from Confluent shareholders and regulatory approvals.