IBM Stock Stung By Anthropic Fears. Analyst Says AI 'Can't Replace' The Mainframe.

IBM (IBM) stock edged higher early Tuesday, after suffering its worst single-day loss in more than 25 years on Monday. The slide was driven by fears of Anthropic’s AI coding capabilities replacing legacy parts of IBM’s business — a concern that at least one analyst pushed back against.

The trouble for IBM stock began when Anthropic published a blog post Monday afternoon, showing how its Claude Code tool can automate parts of the process for modernizing COBOL code. Short for common business-oriented language, COBOL dates back to 1960 and still supports nearly 95% of all ATM transactions, among other uses.

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“Modernizing a COBOL system once required armies of consultants spending years mapping workflows,” Anthropic said in a blog post, adding that “AI changes this.”

IBM produces the majority of mainframe computers still operating on COBOL. Further, IBM’s Watsonx platform is also offering tools to help COBOL modernization efforts. That fact clearly struck a nerve. IBM fell 13.2% to close at 223,85 on Monday. That marked the stock’s worst single-day drop since October 2000, according to Dow Jones Market Data.

On the stock market today, IBM stock gained more than 2% premarket.

Jefferies analyst Brent Thill reiterated a buy call for IBM late Monday. He noted that IBM is already “disrupting itself” by offering AI-powered COBOL modernization tools. And while AI can translate COBOL, Thill said it “can’t replace” the mainframe, which still runs 73% of global transactional volumes.

“Watsonx Code Assistant for Z has already been in production for over two years and removes the traditional burden of mainframe modernization by using GenAI to refactor COBOL into Java, explain production code, and modernize applications while preserving critical logic,” Thill wrote. “Embedding these capabilities directly into the Z (mainframe) platform gives IBM a structural advantage over horizontal code assistants, which may be powerful but lack native access to mainframe data, tooling, and operational context.”

IBM Stock Latest AI Victim

Monday’s sell-off was a stark example of how AI has been weighing on the software sector broadly for much of the year. New products from Anthropic have sparked sell-offs in certain sectors om multiple occasions. For instance, cybersecurity stocks retreated Friday after Anthropic released a preview of Claude Code Security. The tools help companies spot security vulnerabilities in software code and suggest remediation steps.

IBM stock gained 34% last year, helped by optimism about its AI offerings and software segment growth. But Monday’s move is the latest evidence that investors are becoming more concerned about what AI will mean for the more than century old tech giant. Shares are now down 24% year-to-date.

IBM announced a partnership with Anthropic last year that included plans to integrate Claude into IBM’s software portfolio. IBM also worked with Anthropic to develop a guide that helps enterprises build and operate AI agents, the companies said at the time.

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