IBM's move to acquire Confluent (NASDAQ:CFLT) for $9.3 billion could be the kind of strategic swing that reshapes its long-term AI ambiti

IBM has cracked open its wallet again, agreeing to shell out $11 billion for Confluent in a bid to glue together the data sprawl underpinning the next wave of enterprise AI.

Amid Big Tech's surging data center spending, IBM CEO Arvind Krishna and Fitch Ratings are both warning of the risks if these investments don't yield returns.

The CEO of one-time tech giant IBM has says that he doubts that data center mega-projects will prove profitable. Speaking on the Decoder podcast, Arvind Krishna admitted that he was using napkin math and that "anything in the future is speculative."

As tech giants race to build data centers targeting artificial general intelligence (AGI), IBM CEO Arvind Krishna cautions that the industry is on a costly path that's difficult to recoup.

Arvind Krishna, who has been at the helm of the legacy tech company since 2020, said even a simple calculation reveals there is “no way” tech companies’ massive data center investments make sense. This is in part because data centers require huge amounts of energy and investment, Krishna said on the Decoder podcast.