Big Blue’s stock nosedived over 13% on Monday after Anthropic announced that its Claude Code tool can help modernize COBOL, a programming language that runs on IBM computers.
- Investors fear that the new capabilities could disrupt IBM’s mainframe business.
- Jefferies reiterated ‘buy’ on IBM after the stock slide.
- Retail investors turn ‘extremely bullish,’ arguing that the threat is only against a small portion of IBM’s overall business.
Jefferies on Monday sought to calm investor jitters around International Business Machines Corp. after the legacy software giant’s shares tumbled the most since the Dot Com bubble, pressured by a newly launched AI tool seen as a competitive threat. The research firm argued that IBM’s much-anticipated “re-acceleration” will ultimately depend on broader industry demand for cloud, AI and automation.
The investment research firm maintained a ‘Buy’ rating with a $370 price target. IBM shares declined by more than 13% to $223.35 on Monday, their sharpest single-day drop since October 2000. It is down 27% in February, on track for its biggest monthly slide since at least 1968.
Threat From Anthropic's New AI
Earlier in the day, Anthropic announced capabilities in its Claude Code tool that modernize legacy systems running Common Business-Oriented Language (COBOL).
“Modernizing a Cobol system once required armies of consultants spending years mapping workflows,” Anthropic wrote in a blog post. “Tools like Claude Code can automate the exploration and analysis phases that consume most of the effort in Cobol modernization.”
COBOL is a key business vertical for IBM; Most of the mainframe computers that run COBOL are made by the company. “Legacy code modernization stalled for years because understanding legacy code cost more than rewriting it. AI flips that equation,” the blog post said.
IBM Growth Hinges On AI, New Business, Analyst Says
Jefferies said some investors are worried that IBM’s own AI tools for its mainframe business might disrupt its legacy business; however, IBM’s future growth in software doesn’t depend mainly on mainframes. Instead, it depends on broader growth in hybrid cloud, AI, and data, which he believes remains strong.
AI-Linked Market Disruption
The selloff in IBM stock is only the latest triggered by AI fears, notably AI rollouts from Anthropic. Last week, the AI company unveiled new security capabilities in Claude Code, and sparked a major selloff in cybersecurity stocks like Palo Alto Networks and CrowdStrike.
The launch of the Claude Code platform itself triggered a broad selloff in software stocks last month.
Retail’s View
On Stocktwits, retail sentiment for IBM flipped to ‘extremely bullish’ as of late Monday, from ‘bearish’ the previous day, even as users debated the competitive threat from Anthropic to IBM, the company’s growth in AI and emerging technologies, and the recent pullback that has made the stock more attractive.
Yes, it’s a threat, but in a “niche sense,” a user argued. “AI automation for COBOL modernization challenges a specific consulting and services niche that IBM’s legacy business relies on. Is it existential for IBM? No — not financially. That niche likely represents only a small share of overall revenue (low single-digit %). IBM’s biggest revenue drivers today are software, consulting, and hybrid cloud/AI, not COBOL modernization alone.”
IBM, which recently agreed to acquire cloud company Confluent in an $11 billion deal, reported last quarter sales that topped estimates and said its AI business was growing rapidly. The company also forecast 2026 revenue above analysts’ projections, prompting a string of price target hikes.
IBM stock is down about 25% year to date.
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