Confluent, Inc. (CFLT): A Bull Case Theory

We came across a bullish thesis on Confluent, Inc. on Outperforming the Market’s Substack by Simple Investing. In this article, we will summarize the bulls’ thesis on CFLT. Confluent, Inc.'s share was trading at $30.53 as of January 28th. CFLT’s forward P/E was 62.50 according to Yahoo Finance.

Confluent, Inc. operates a data streaming platform in the United States and internationally. CFLT demonstrated resilience in 3Q25, highlighting that its focus on fundamentals is beginning to pay off. The company reported subscription revenue of $286 million, up 19% year-over-year and 2% ahead of consensus estimates, driven by strong demand in its core streaming business and growth across its DSP, AI, and partner ecosystem. Confluent Cloud revenue grew 24% year-over-year to $161 million, also beating expectations by 2%.

Notably, operating margins came in at 9.7%, well above the 7.1% consensus, reflecting both revenue outperformance and improved sales and marketing leverage through streamlined coverage. This margin beat of 260 basis points underscores the effectiveness of the recent GTM restructuring, which aligned the team to drive new use cases and multi-product adoption. Management raised guidance for 4Q25, projecting total revenue of $296 million, up 18% year-over-year, and Confluent Cloud revenue of $165 million, growing 20%, both slightly ahead of consensus. Operating margins are expected to stabilize at 7%.

Confluent’s competitive positioning remains robust, consistently winning against cloud service provider streaming offerings with deal win rates above 90% and average deal sizes doubling over the past two quarters. Usage across multi-tenant Freight clusters, Enterprise clusters, and WarpStream has quadrupled over the last three quarters.

The company’s partner ecosystem also contributed meaningfully, sourcing 25% of new business in 3Q25, with key partners including Databricks, Microsoft, Google Cloud, AWS, and MongoDB. Overall, Confluent’s improving fundamentals, strong growth in cloud consumption, and effective GTM execution position it for continued momentum, providing both revenue growth and margin expansion while reinforcing its leadership in the streaming data space.

Previously, we covered a bullish thesis on GitLab Inc. (GTLB) by Compounding Your Wealth in April 2025, which highlighted the company’s strong enterprise expansion, AI-driven DevSecOps platform, record Q4 deals, and accelerating revenue and free cash flow growth. GTLB’s stock price has depreciated by approximately 20.80% since our coverage due to broader market weakness and increased competition. Simple Investing shares a similar perspective on Confluent, Inc. (CFLT) but emphasizes its resilient cloud streaming business, strong GTM execution, and margin expansion as key growth drivers.

Confluent, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 60 hedge fund portfolios held CFLT at the end of the third quarter which was 50 in the previous quarter. While we acknowledge the potential of CFLT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.