(Bloomberg) — International Business Machines Corp. shares had their worst day in more than 25 years on Monday, after AI startup Anthropic PBC said its Claude Code tool can help modernize Cobol, a dated programming language that’s run on IBM computers.
The stock plunged 13% in its biggest single-day percentage loss since October 2000. With the decline, IBM shares have fallen 27% in February, on track for its biggest one-month slide since at least 1968, according to data compiled by Bloomberg.
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“Modernizing a Cobol system once required armies of consultants spending years mapping workflows,” Anthropic wrote in a blog post. “Tools like Claude Code can automate the exploration and analysis phases that consume most of the effort in Cobol modernization.”
Most of the mainframe computers that run Cobol are made by IBM, and the selloff made the company the latest to see heavy pressure on the fear that artificial intelligence will weigh on the growth prospects of legacy companies.
A significant chunk of IBM’s revenue remains tied to its mainframe business. These massive customer-owned servers run some applications on Cobol, a coding language that’s older than those now common in the rest of the technology industry. Mainframes are still purchased by customers with high reliability needs, such as those in finance or government.
On Friday, Anthropic introduced a new security feature into its Claude AI model, spurring widespread selling of cybersecurity stocks. Software stocks have been broadly weaker this year on concerns over AI-related disruption; a major software ETF is down 27% this year, on track for its biggest one-quarter drop since the financial crisis in 2008.
Much of the selling has come on new AI tools released by companies like Anthropic, OpenAI, and Alphabet Inc. Investors are fretting that the ability to “vibe code” — use AI to write software code — will let users create their own applications, which will diminish demand for legacy products and weigh on companies’ growth, margins and pricing power.
“While we understand why mainframe migration could be a perceived negative for IBM, we would point out that IBM has already provided customers with several modernization options,” wrote Amit Daryanani, an analyst at Evercore ISI. “Our sense is, clients already had the option to migrate from the mainframe, yet they are sticking with the platform.”