What Happened?
Shares of data streaming platform provider Confluent (NASDAQ: CFLT) jumped 28.6% in the morning session after IBM agreed to acquire the data-streaming company for $31.00 per share in an all-cash deal.
The transaction gave Confluent an enterprise value of $11 billion. The acquisition was seen as a significant move by IBM to bolster its data infrastructure capabilities to support its cloud and artificial intelligence initiatives. Confluent's platform allows companies to connect and process data in real time, which is foundational for deploying AI systems. The definitive agreement confirmed earlier reports that the two companies were in advanced talks regarding a potential acquisition.
Is now the time to buy Confluent? Access our full analysis report here.
What Is The Market Telling Us
Confluent’s shares are very volatile and have had 24 moves greater than 5% over the last year. But moves this big are rare even for Confluent and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 18 days ago when the stock dropped 3.5% on the news that markets faded the Nvidia rally in the morning session, as investors remained uncertain about future rate cuts.
While the trading day began with significant enthusiasm, pushing the Dow Jones Industrial Average up more than 700 points and the Nasdaq Composite up 2.6%, momentum quickly evaporated as the session wore on. The primary catalyst for this sharp reversal was a stronger-than-expected jobs report, which reduced the implied odds of a December interest rate cut to less than 40%. This macroeconomic anxiety overshadowed stellar corporate performance. Nvidia initially surged 5% on blockbuster earnings and CEO Jensen Huang's bullish outlook on "off the charts" demand for Blackwell chips.
However, the stock eventually turned negative, acting as a heavy weight that dragged the broader indices into the red. The sell-off partly reflects a deepening caution regarding high-flying tech valuations in a "higher-for-longer" rate environment. Consequently, investors appeared to rotate capital away from volatile growth sectors and toward defensive staples, evidenced by Walmart's 6% gain following its own earnings beat. Ultimately, the market could not sustain the morning's euphoria, as traders prioritized rate realities over AI potential.
Confluent is up 5.6% since the beginning of the year, but at $29.85 per share, it is still trading 20.7% below its 52-week high of $37.65 from February 2025. Investors who bought $1,000 worth of Confluent’s shares at the IPO in June 2021 would now be looking at an investment worth $662.93.
The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. Click here for access to our special report that reveals one profitable leader already riding this wave.
