IBM said Monday it will buy data infrastructure company Confluent in a deal valued at $11 billion, ramping up its cloud-computing offerings to capitalize on an AI-driven demand boom.

Big Blue, under CEO Arvind Krishna, has doubled down on M&As to beef up its cloud and software business – a high-growth, high-margin area – as customers invest to upgrade their digital infrastructure to house complex artificial intelligence applications.

Mountain View, Calif.-based Confluent provides technology needed to manage massive, real-time data streams for artificial intelligence models.

“IBM and Confluent together will enable enterprises to deploy generative and agentic AI better and faster,” Krishna said in a statement.

“With the acquisition of Confluent, IBM will provide the smart data platform for enterprise IT, purpose-built for AI.”

The offer price of $31 per share represents a premium of around 34% to Confluent’s last close.

The Confluent stock is up nearly 44% since Oct. 7, the last trading session before Reuters reported that the company was exploring a sale after attracting acquisition interest.

“IBM is buying the critical data firehose that supports the AI hype,” said Michael Ashley Schulman, chief investment officer at Running Point Capital.

“With this purchase, IBM improves… recurring revenue, tightening its grip on large enterprises.”

IBM has long turned to deal-making to gain scale and fend off competition, especially in cloud computing.

In April last year, the company bought cloud firm HashiCorp in a deal valued at $6.4 billion. Its $34 billion deal for Red Hat in 2019 is credited by analysts as the central catalyst that boosted its cloud business.

IBM will fund the Confluent deal with cash on hand and the transaction is expected to close by the middle of 2026.

The deal is expected to boost IBM’s adjusted core earnings within the first full year of the transaction’s completion and it will add to free cash flow in year two.