IBM has become the latest major technology company to suffer a sharp drop in its stock price, which can be attributed to market concerns about new artificial intelligence features.
IBM’s stock price plummeted 13.2% on Monday after AI company Anthropic published a new blog post. The post claimed that its Claude Code could automate some of the modernization work on the Common Business Language (COBOL), a high-level programming language developed specifically for business data processing needs. On that day, IBM became the worst-performing stock in the S&P 500.
Since the beginning of February, IBM’s stock price has fallen by 26.8%, potentially marking its worst month since December 1992. According to Dow Jones market data, the stock also experienced its largest single-day drop since March 12, 2020.
COBOL powers numerous daily transactions in critical sectors such as banking, travel, insurance, and government. According to Anthropic’s blog post, this programming language, first introduced in 1960, supports 95% of ATM transactions in the United States. For a long time, the modernization process for COBOL systems was complex and costly, a lucrative competitive advantage for IBM. However, Anthropic’s latest announcement casts a shadow over the prospects of this part of IBM’s business.
In its blog post, the AI company stated that Claude Code can “analyze dependencies between thousands of lines of code” and identify risks that would take human teams months to discover. “With AI, enterprise teams can modernize their COBOL codebases in months, not years,” Anthropic wrote.
Prior to this, IBM had been considered a low-key winner in the field of artificial intelligence, with its generative AI-related businesses accumulating over $12.5 billion in revenue by the end of 2025. Recently, IBM’s valuation has even surpassed Microsoft’s, reflecting both the market’s assessment of the current AI winner and investors’ preference for less capital-intensive technology companies amidst surging AI spending.
IBM’s dominance in the COBOL market is a key pillar of its infrastructure and consulting business growth. The company’s Z mainframe business, which provides core IT infrastructure for COBOL systems, saw a 48% year-over-year increase in revenue in the fourth quarter, marking its highest revenue in 20 years.
Anthropic’s announcement on Monday directly targeted the traditional COBOL modernization consulting model. “Artificial intelligence makes economic models feasible by automating tasks that previously required a large number of consultants, while freeing engineers to focus on migration decisions that require domain expertise,” the company wrote.
IBM is also developing its own AI tools to help modernize the COBOL system. CEO Arvind Krishna stated in last month’s earnings call that the company’s Watsonx AI platform can “refactor COBOL code into Java” and help engineers understand existing code on the COBOL platform.
