IBM Spent $11 Billion on Confluent to Add Software Growth as Its Own Software Sales Stall

IBM ($IBM) finished buying real-time data company Confluent in March, a deal that valued Confluent at about $11 billion. Excluding acquisitions, IBM's own software sales were flat last quarter, according to CFO Jim Kavanaugh.
IBM's software unit brought in $7.76 billion in Q2, up 5%, or about 45% of total revenue. IBM Z mainframe revenue fell 42%, and transaction processing software fell 9% excluding currency swings.
Bank of America analyst Wamsi Mohan kept his Buy rating and $280 price target on Oct. 15. BofA estimates IBM's own software sales will slip about 0.3% in Q3, while an estimated $350 million from Confluent should lift total software growth to about 3.5%. Acquired sales count as growth only for the first year, so Confluent's lift fades in Q2 2027.
IBM carries a consensus Buy rating from 25 analysts with an average price target of $242.65: 12 Buy ratings, 11 Holds, and two Sells. IBM shares fell 25% on July 14 after the company warned that numerous large deals had failed to close on schedule.
IBM reports Q3 results on Oct. 21.