IBM Stocks Crater as Anthropic Cracks the COBOL Code

This Tuesday, IBM shares fell by more than 13% in a single session, wiping out over $31 billion in market capitalization. 

The biggest single-day fall of the company’s stock came due to the AI company Anthropic announcing that its Claude Code tool can be used to automate the modernization of legacy codebases.

This announcement struck directly at IBM, as it has long-dominated the Common Business-Oriented Language (COBOL) system, which still handles some 80% of credit card transactions and 95% of ATM transactions across the globe.

"Modernizing a COBOL system once required armies of consultants spending years mapping workflows and analyzing dependencies," Anthropic stated in their release. "Tools like Claude Code can now automate the exploration and analysis phases that traditionally consume the vast majority of human effort."

If this is indeed proven to be true, the migration process, which often took decades to complete, could be done in quarters.

"AI excels at streamlining the specific tasks that once made COBOL modernization cost-prohibitive," the company added.

The market's reaction reflects a fundamental shift in investor sentiment. For years, IBM was responsible for selling mainframe systems that use COBOL for transaction processing services, but now, the company could face serious hurdles, as it is becoming yet another giant targeted by AI advances.

IBM, however, remains defiant. In a statement addressing the market volatility, the company doubled down on the value of human expertise in these environments:

"New AI tools emerge every week, including our own.” the company stated. “What they do not change is the fundamental engineering challenge of running mission-critical workloads at scale. Modernization is about more than just translating lines of code; it is about the security, resilience, and compliance that only decades of experience can provide."

While IBM’s Watsonx platform offers its own generative AI for COBOL-to-Java refactoring, today's record drop in stock value shows that Anthropic’s breakthrough is most likely going to lead to a world where an IBM mainframe will not be required to run COBOL in the near future.