IBM shares tank 13% as Anthropic's AI threatens legacy systems
What's the story
International Business Machines (IBM) saw its shares tank by nearly 13.2% to $223.35 per share on Monday. The decline came after Anthropic announced that its Claude Code tool could be used to modernize legacy systems running COBOL, a programming language widely associated with IBM's mainframe systems. The news has sent shockwaves through the tech industry, raising concerns over the impact of rapidly evolving artificial intelligence (AI) technologies on established businesses like IBM.
Programming language
COBOL's significance and ubiquity
COBOL, short for Common Business-Oriented Language, is a dominant code system developed in the late 1950s. It is often used in business data processing tasks such as payment processing and retail transaction systems. Anthropic estimates that 95% of ATM transactions in the US use COBOL, making it a prime target for cost-efficient AI disruption.
AI impact
Claude Code's potential to disrupt traditional tech
Anthropic's Claude Code tool could revolutionize COBOL modernization by mapping dependencies across thousands of lines of code, documenting workflows, and identifying risks that would take human analysts months to surface. The company noted in a blog post, "AI excels at streamlining the tasks that once made COBOL modernization cost-prohibitive." This potential has raised alarms among investors about the future of traditional tech companies like IBM.
Business impact
The mainframe dilemma for IBM
IBM's heavy reliance on its mainframe business, which runs some applications on COBOL, poses a risk in the face of technological advancement. These customer-owned servers are still being bought by clients with high reliability needs such as those in finance or government. The fear that artificial intelligence could hinder the growth of big tech companies has led to heavy pressure on IBM's shares. Investors are increasingly wary of tech stocks as AI continues to disrupt traditional business models.