International Business Machines stock is experiencing a significant downturn this Monday, becoming yet another victim of the fast-advancing AI sector, following Anthropic’s announcement that its Claude Code tool could aid in updating outdated systems that utilize COBOL.
IBM’s shares closed the day nearly 13.2% lower, at $223.35 each, after Anthropic revealed that Claude Code could facilitate the automation of exploration and analysis tasks that contribute to the complexities of modernizing COBOL, a vital area for IBM’s business. IBM has traditionally provided mainframe systems optimized for extensive transaction processing, a domain where COBOL has been frequently deployed.
COBOL, which stands for Common Business-Oriented Language, is a major programming language created in the late 1950s, commonly utilized in business data processing, including payment processing and retail transaction management. Approximately 95% of ATM transactions in the United States rely on COBOL, as per Anthropic, positioning it as a key target for economically advantageous AI disruption.
“Hundreds of billions of COBOL lines are operational daily, supporting essential systems in sectors like finance, aviation, and government. Nevertheless, the number of individuals who comprehend it continues to decline annually,” Anthropic stated in a Monday blog post. “AI is particularly effective at simplifying the tasks that previously rendered COBOL modernization financially unfeasible.”
Claude Code can assist in modernizing COBOL codebases by mapping interdependencies across thousands of code lines, detailing workflows, and pinpointing risks that “would require human analysts months to identify,” according to Anthropic.
“Modernizing legacy code has been stagnant for years since comprehending legacy code was more expensive than recreating it. AI changes this dynamic,” the blog post noted.
This recent application reinforces Anthropic’s initiative to transform legacy code systems and aid companies in their digital transformation efforts, which are reportedly hindered partly by declining developer productivity and “technical debt.” Technical debt pertains to the future expenses resulting from shortcuts in software development that lead to greater maintenance challenges for enterprises in the future.
IBM is the latest stock to decline due to AI apprehensions, which have unsettled investors recently and fostered a tumultuous trading atmosphere characterized by a “sell first and ask questions later” mentality. On Friday, a range of cybersecurity firms experienced a downturn after Anthropic introduced a new feature in Claude Code, termed Claude Code Security, which it claimed could scan codebases for security vulnerabilities and detect software flaws for human evaluation. The sector remained under strain during Monday’s trading session.
Monday’s market decline resulted in IBM shares dropping more than 24% year to date.
