IBM Shares Plummet Over 13% After Anthropic AI Tool Sparks Market Shock
Shares of International Business Machines Corp. (IBM) suffered a dramatic downturn on Monday, marking the company’s steepest single‑day loss in more than a quarter‑century as investors reacted sharply to the release of an advanced artificial intelligence tool from startup Anthropic PBC.
The stock fell roughly 13.2%, its biggest decline since October 2000, wiping billions from IBM’s market value as traders assessed the potential impact of Anthropic’s Claude Code — an AI‑driven programming tool designed to dramatically streamline the modernization of legacy software systems.
AI Tool Targets Legacy Code as Market Shifts
Anthropic’s announcement centered on Claude Code’s ability to help update COBOL, a decades‑old programming language still widely used on mainframe systems in banking, insurance and government sectors. Traditionally, updating COBOL code has required extensive manual work by teams of consultants over months or years — a service that has been an important revenue stream for legacy technology providers, including IBM.
In its messaging, the company said that tools like Claude Code can automate much of the exploration and analysis work involved in code modernization, allowing organizations to modernize systems “in quarters instead of years.”
IBM’s mainframe business — long considered resilient because of its mission‑critical role in handling large‑scale transactions and workflows — suddenly appeared vulnerable in the eyes of investors. The worry, analysts said, is that AI could reduce demand for legacy consulting and system migration services that historically underpinned parts of IBM’s revenue.
Broader Market Ripples and Tech Sector Selloff
The sell‑off was not confined to IBM. Broader software and cybersecurity stocks also weakened, reflecting wider investor anxiety about the prospects of AI tools disrupting established business models. Shares of well‑known cybersecurity companies such as CrowdStrike and Datadog slid in tandem with IBM’s decline as markets weighed the potential fallout from new AI capabilities.
Market analysts suggested that the response to Anthropic’s announcement underscores a growing sensitivity among investors to the pace of AI innovation — particularly developments that could displace human labor, compress timelines for technical work, or upend traditional revenue streams for established tech players.
Legacy Systems, AI Advancements and Investor Sentiment
COBOL, created in the late 1950s, still powers a surprising amount of financial infrastructure, including ATM networks and major institutional transaction systems. Its persistence in critical operations has made modernization efforts a multi‑billion‑dollar business, especially for large consulting and tech firms.
However, the advent of Claude Code — alongside other AI innovation — has sharpened focus on how emerging tools might replace or augment longstanding practices. Some analysts believe that artificial intelligence could unlock efficiencies that diminish the need for traditional system‑migration projects, prompting a reassessment of growth prospects for firms deeply invested in legacy platforms.
Despite widespread market concern, other voices argue that the sell‑off may represent an overreaction, noting that demand for modernization solutions remains robust and that many companies continue to rely on mainframes for core operations. Still, Monday’s price action made clear that AI’s rapid evolution is increasingly shaping investor behavior and valuations across the technology sector.
