Key Takeaways:
- AI & Streaming Growth: Data streaming adoption is accelerating as enterprises move AI from testing to production.
- Price Projection: Based on current execution, CFLT stock could reach $50 by December 2028.
- Potential Gains: This target implies a total return of 63% from the current price of $31.
- Annual Return: Investors could see roughly 18% growth over the next 2.9 years.
Now Live: Discover how much upside your favorite stocks could have using TIKR’s new Valuation Model (It’s free)>>>
Confluent (CFLT) delivered strong third-quarter results that exceeded guidance across all key metrics. The data streaming platform provider reported 24% growth in cloud revenue and expanded operating margins by 3 percentage points to 10%.
CEO Jay Kreps highlighted robust momentum in moving customer workloads into production. The company saw over 40% sequential growth in the late-stage pipeline for the second consecutive quarter, positioning Confluent for durable consumption growth ahead.
- Mobile data and AI workloads continue driving demand for real-time data infrastructure.
- Confluent’s platform processes millions of events daily for customers ranging from healthcare technology leader Siemens Healthineers to digital-native banks like EVO Banco.
- These companies rely on Confluent’s streaming backbone to deliver real-time insights that improve operations and customer experiences.
- The company’s Flink stream-processing product showed particularly impressive traction, with cloud ARR growing by over 70% sequentially.
- More than 1,000 customers now use Flink, including a dozen spending over $100,000 annually. More than 4 customers with over $1 million in annual spend.
- This comprehensive adoption demonstrates the foundation for scaling into what management sees as a significant market opportunity.
Despite strong fundamentals and accelerating product adoption, Confluent trades at $31, leaving room for upside for investors who recognize the company’s strategic position in real-time data infrastructure.
See analysts’ full growth forecasts and estimates for CFLT stock (It’s free) >>>
What the Model Says for Confluent Stock
We analyzed Confluent as enterprises shift from AI experimentation to production deployments requiring real-time data context.
The company benefits from multiple structural tailwinds. Cloud migration continues as customers move from self-managed Kafka to Confluent’s fully managed platform.
The transition delivers better performance, lower operational costs, and eliminates infrastructure management burdens.
New products expand the addressable market beyond core streaming. Flink stream processing, Tableflow data governance, and WarpStream’s cost-effective architecture create additional revenue streams while deepening customer relationships.
Management noted that customers adopting Flink increased total spending by more than 6x over the past year.
The AI opportunity presents another growth vector. As companies move from prototypes to production AI systems, they need a continuously updated, trustworthy data context.
Confluent’s platform addresses this challenge by connecting data from every system and supporting complex, real-time pipelines.
One health and fitness chain with nearly 200 clubs uses Confluent to power AI-driven personalized wellness recommendations, processing millions of real-time interactions while ensuring security and compliance.
Using a forecast of 16% annual revenue growth and 14% operating margins, our model projects the stock price will reach $50 in 2.9 years. This assumes a 57x price-to-earnings multiple.
That is comparable to Confluent’s historical P/E of 61x (one year). The lower multiple acknowledges near-term profitability ramp as the company balances growth investments with margin expansion.
Our Valuation Assumptions
Estimate a company’s fair value instantly (Free with TIKR) >>>
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for CFLT stock:
1. Revenue Growth: 16%
Confluent’s growth centers on accelerating cloud consumption and expanding its product portfolio. Cloud revenue grew 24% in Q3, representing 56% of total subscription revenue and gaining share each quarter.
Management sees continued momentum from several drivers. Late-stage pipeline progression indicates healthy adoption of new workload.
Customers commit to larger, longer-term deals as evidenced by 43% RPO growth. The partner ecosystem now sources over 25% of new business, up from 20% last quarter, providing additional scale.
Product innovation supports revenue expansion. WarpStream consumption grew eightfold in its first year post-acquisition.
Flink reached a low eight-figure ARR in roughly 18 months since general availability. These new offerings expand use cases while deepening wallet share with existing customers.
2. Operating margins: 13.9%
Confluent expanded operating margins 340 basis points to 10% in Q3, exceeding guidance significantly.
This performance reflects improving sales efficiency as the company streamlines coverage and refines go-to-market execution.
Management demonstrated disciplined expense management while investing in growth. The company added 48 new customers with $100,000+ in ARR, the largest sequential increase in two years, while maintaining operating leverage.
As cloud revenue scales and new products mature, margin expansion opportunities increase through higher gross margins enabled by multi-tenant cluster architectures.
3. Exit P/E Multiple: 57x
The market values Confluent at 60x earnings. We assume the P/E will compress to 57x over our forecast period as the company transitions from high-growth to balanced growth with profitability.
Software infrastructure companies command premium multiples when demonstrating durable growth with expanding margins.
Confluent’s strategic position in AI and real-time data processing supports a premium valuation.
The company maintains win rates above 90% against cloud provider streaming offerings while doubling average deal sizes over two quarters.
Build your own Valuation Model to value any stock (It’s free!) >>>
What Happens If Things Go Better or Worse?
Data infrastructure spending fluctuates with economic conditions and technology adoption cycles. Here’s how Confluent stock might perform under different scenarios through December 2030:
- Low Case: If revenue growth slows to 13% and net income margins reach only 17%, investors still see a 70% total return (11% annually).
- Mid Case: With 14% growth and 18% margins, we expect a total return of 125% (18% annually).
- High Case: If AI acceleration and product adoption drive 16% revenue growth while Confluent achieves 20% margins, returns could hit 192% total (25% annually).
See what analysts think about CFLT stock right now (Free with TIKR) >>>
The range reflects the execution of cloud migration, the successful scaling of new products such as Flink, and the company’s ability to capture AI-driven data-streaming demand.
In the low case, optimization headwinds persist, or competitive pressure intensifies.
In the high case, AI workloads exceed expectations, and margin expansion accelerates faster than anticipated as operating leverage materializes.
How Much Upside Does Confluent Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
See a stock’s true value in under 60 seconds (Free with TIKR) >>>
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
