International Business Machines (IBM) shares experienced a significant downturn, plummeting 11% in Monday afternoon trading, as the company finds itself the latest casualty of the accelerating advancements in artificial intelligence. The catalyst for the sharp decline was the announcement by AI firm Anthropic regarding a new capability for its Claude Code product, designed to automate the complex exploration and analysis inherent in COBOL modernization projects.
COBOL, or Common Business-Oriented Language, is a programming language that has been a cornerstone of business data processing for decades. Its enduring presence is critical, powering systems responsible for vast transaction volumes across sectors like payment processing and retail. This deep integration makes it a prime candidate for disruption by cost-effective AI solutions.
Anthropic highlighted in a recent blog post that COBOL remains remarkably prevalent, powering an estimated 95% of ATM transactions in the United States. “Hundreds of billions of lines of COBOL run in production every day, powering critical systems in finance, airlines, and government. Despite that, the number of people who understand it shrinks every year,” the company stated. This looming skills gap, coupled with the sheer volume of legacy code, presents a significant challenge that AI is now poised to address.
The company elaborated on how Claude Code can streamline COBOL modernization by mapping intricate dependencies across massive codebases, generating comprehensive documentation, and identifying potential risks that would typically demand months of human analysis. The blog post posited a fundamental shift in the economics of legacy code: “Legacy code modernization stalled for years because understanding legacy code cost more than rewriting it. AI flips that equation.”
This event underscores a broader trend of AI-driven anxieties impacting the stock market. In recent weeks, investors have demonstrated a “sell first, ask questions later” mentality, leading to significant volatility across various technology sectors. Just last Friday, a wave of cybersecurity stocks faced pressure following Anthropic’s introduction of Claude Code Security, a feature capable of scanning code for vulnerabilities. The cybersecurity sector continued to feel the impact of this AI-driven scrutiny in Monday’s trading session.
The substantial sell-off on Monday has brought IBM’s stock down by nearly 22% year to date, signaling a growing investor concern about the long-term implications of AI for companies heavily reliant on established, legacy technologies. As AI capabilities mature, particularly in code analysis and modernization, businesses and their investors are recalibrating their strategies and valuations to account for this rapidly evolving technological landscape.
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