IBM is the latest AI casualty. Shares tank 13% on Anthropic programming language threat

Shares of International Business Machines (IBM) experienced a significant decline on Monday, closing down nearly 13.2% at $223.35 per share. This drop follows an announcement by Anthropic regarding its Claude Code tool and its potential to modernize systems utilizing COBOL, a key area of IBM’s business.

The Rise of AI and Legacy Systems

Anthropic stated that Claude Code can automate processes involved in updating legacy systems built on COBOL, a programming language developed in the late 1950s. The tool is designed to map dependencies, document workflows, and identify risks within complex COBOL codebases – tasks that Anthropic claims could take human analysts months to complete.

Did You Know? An estimated 95% of ATM transactions in the U.S. Currently rely on COBOL.

According to Anthropic, “Hundreds of billions of lines of COBOL run in production every day, powering critical systems in finance, airlines, and government.” However, the number of professionals who understand and can maintain this code is decreasing.

The Cost of Modernization

The challenge of modernizing COBOL systems has historically been the high cost associated with understanding the existing code. Anthropic argues that AI, specifically Claude Code, “flips that equation” by making the analysis phase significantly more efficient. Here’s due to the fact that legacy code modernization stalled for years because understanding legacy code cost more than rewriting it.

This development comes as part of a broader trend of AI-driven disruption in the tech sector. Just days prior, cybersecurity stocks also faced pressure after Anthropic unveiled Claude Code Security, a tool designed to identify software vulnerabilities.

Expert Insight: The recent market reaction highlights investor sensitivity to the potential for AI to rapidly reshape established technology markets. The focus is shifting from the promise of AI to the potential for disruption of existing business models, and the speed at which that disruption may occur.

Year to date, IBM shares have fallen by more than 24%.

What Could Happen Next

The market may continue to react to announcements regarding AI capabilities, potentially leading to further volatility in the tech sector. If Anthropic’s Claude Code proves effective at reducing the cost and complexity of COBOL modernization, other companies may develop similar tools, increasing competitive pressure. This proves also possible that IBM will respond with its own AI-powered solutions for legacy system modernization.

Frequently Asked Questions

What is COBOL?

COBOL, short for Common Business-Oriented Language, is a programming language developed in the late 1950s and widely used for business data processing, including payment processing and retail transactions.

What is “technical debt”?

Technical debt refers to the future costs associated with shortcut solutions in software development, which can lead to increased maintenance needs for companies over time.

What was the impact of Anthropic’s cybersecurity tool announcement?

A number of cybersecurity companies experienced declines in their stock prices after Anthropic announced Claude Code Security, a tool designed to scan codebases for security vulnerabilities.

How will companies balance the need to modernize legacy systems with the risks and opportunities presented by rapidly evolving AI technologies?