Shares of International Business Machines Corp (IBM) witnessed their sharpest decline in over 25 years after artificial intelligence startup Anthropic announced a major capability upgrade to its Claude platform. The development has reignited investor concerns about the long-term viability of legacy technology business models.
IBM stock plunged as much as 13% during intraday trading, marking its worst single-day performance since March 2020. The sell-off has now dragged the stock down 26% in February alone, putting it on track for its largest monthly percentage fall since at least 1968, according to data compiled by Bloomberg.
🤖 Claude Code Threatens IBM’s Core Mainframe Business
The sharp market reaction followed Anthropic’s announcement that its Claude Code tool can significantly accelerate the modernization of COBOL, one of the oldest programming languages still in widespread use. COBOL applications power critical systems across banking, insurance, and government infrastructure—most of which run on IBM’s mainframe computers.
In a blog post, Anthropic stated that traditional COBOL upgrades typically require large consulting teams working for years to understand complex system dependencies. Claude Code, however, can automate the exploration and analysis phase, dramatically reducing time, cost, and manpower required for modernization.
Since IBM manufactures the majority of mainframes that support COBOL workloads, investors fear that AI-driven automation could undermine a key revenue pillar of the company.
🏦 Why Mainframes Still Matter—and Why AI Is a Threat
IBM’s mainframe division remains a significant contributor to its overall business. These systems are prized for their high reliability, security, and uptime, making them essential for financial institutions and government agencies.
However, the rapid evolution of AI tools capable of understanding, refactoring, and rewriting legacy code is raising questions about how long IBM can defend this moat.
🔐 AI Shockwaves Hit Cybersecurity and Software Stocks
The market turbulence didn’t stop with IBM. On Friday, Anthropic also rolled out a new security feature within its Claude AI model, triggering broad selling across cybersecurity stocks.
Software companies have faced sustained pressure in 2026 as investors grow wary of AI-driven disruption. A major software-focused exchange-traded fund is already down 27% this year, putting it on pace for its steepest quarterly decline since the 2008 global financial crisis.
🧠 ‘Vibe Coding’ Raises Red Flags for Legacy Tech Firms
Much of the anxiety stems from the rise of so-called “vibe coding”—a trend where users rely on AI to generate functional software with minimal manual coding. Tools from companies like OpenAI, Anthropic, and Alphabet Inc. are making it easier for individuals and businesses to build custom applications without traditional software vendors.
Investors worry this shift could reduce demand for established software products, pressuring revenue growth, profit margins, and pricing power across the legacy tech sector.
