Shares of International Business Machines Corp. (IBM) saw their largest one-day loss in over 25 years on Monday after artificial intelligence company Anthropic introduced a new tool designed to modernize COBOL, a long-standing programming language frequently used on IBM’s mainframe computers.
The company faced the biggest single-day fall since October 2000, dropping 13% and bringing losses this month to 27%, while setting up for the steepest monthly decline since at least 1968, according to Bloomberg data.
Anthropic stated that its Claude Code tool can automate much of the work traditionally required to update COBOL systems, which historically involved lengthy and costly projects run by consulting teams. By leveraging AI, the process of analyzing and exploring outdated code can be significantly accelerated, the company said.
In response, IBM emphasized the continuing relevance of its mainframe platform, noting that the system’s value lies in its robust performance and security features, irrespective of programming language. Rob Thomas, IBM’s senior vice president, stated in a blog post that IBM’s mainframes deliver consistent service whether applications run on COBOL, Java, or other languages.
IBM remains heavily reliant on its mainframe division, which is popular with financial institutions and government bodies requiring high levels of reliability. COBOL is still used on many of these machines, despite its age compared to modern programming languages.
Further weighing on the stock, investors have been concerned this year about the integration of new AI technologies into the software sector. Several software and cybersecurity stocks—including those of CrowdStrike and Datadog—also declined following Anthropic’s launch of a new security feature, underscoring worries that AI coding tools will reduce demand for traditional products and services.
Despite these concerns, industry analysts noted that IBM has already offered ways for clients to modernize their mainframe software, and many customers have chosen to continue with IBM’s platform. The concept of simplifying COBOL system updates is not new, with major tech firms having released similar tools in the past.
IBM released its own AI-powered assistant for handling COBOL in 2023; according to CEO Arvind Krishna, this tool has been widely adopted to help customers understand and refresh their COBOL-dependent systems as needed.
