Worst single-day drop since October 2000 wipes over $31 billion from market value as Claude Code threatens decades-old COBOL consulting revenue stream
Introduction
IBM stock plunged 13% on Monday, February 23, 2026, after artificial intelligence startup Anthropic unveiled Claude Code, a new AI tool designed to automate COBOL modernization — a decades-old programming language that powers critical enterprise systems and represents a steady revenue stream for IBM’s consulting business. Shares closed at $223.35, marking IBM’s worst single-day percentage loss since October 2000 and wiping over $31 billion from its market value, according to Bloomberg data.
The selloff came immediately after Anthropic published a blog post explaining how Claude Code can “automate the exploration and analysis work that drives most of the complexity in COBOL modernization.” The announcement triggered a sharp reassessment by investors of IBM’s exposure to legacy programming modernization, a business that has long provided high-margin consulting revenue for the company.
IBM is not alone. Shares of Accenture and Cognizant Technology Solutions also fell roughly 6% as Wall Street reassessed exposure to automation-driven disruption across the legacy system modernization sector.
Background and Context
IBM has long positioned itself as a hybrid cloud and enterprise AI powerhouse. But a significant portion of its consulting and infrastructure services revenue remains tied to maintaining and modernizing legacy systems, particularly those written in COBOL — a programming language created in the late 1950s.
Short for Common Business-Oriented Language, COBOL was designed for business data processing and remains deeply embedded in financial institutions, government agencies, airlines, and large enterprises. An estimated 95% of ATM transactions in the U.S. use COBOL, according to Anthropic. Hundreds of billions of lines of COBOL run in production every day, powering critical systems that handle payments, retail transactions, and government services.
For decades, IBM has benefited from the complexity and cost associated with updating or replacing these systems. The company sells mainframe computers — massive customer-owned servers that run some applications on COBOL — and provides consulting services to help organizations modernize these systems. IBM’s mainframe business and related consulting work have been steady profit centers, particularly as the pool of COBOL-proficient engineers shrinks with each passing year. Only a “handful” of universities still teach COBOL, Anthropic noted in its blog post.
That moat may now be facing credible pressure from AI-driven automation.
Latest Update or News Breakdown
IBM stock suffered its steepest single-day fall in over two decades on Monday, February 23, 2026, after Anthropic unveiled Claude Code, an AI tool aimed at accelerating COBOL system modernization. Here is what happened, based on verified reporting from Bloomberg, CNBC, Yahoo Finance, The Register, Investing.com, and other outlets:
The Stock Plunge:
- 13% intraday drop — closed at $223.35 per share
- Worst single-day percentage loss since October 2000 (over 25 years)
- $31 billion wiped from market value — dropped from $240.8 billion to about $208.7 billion
- 27% decline in February 2026 — on track for IBM’s worst monthly slide since at least 1968, according to Bloomberg data
- Trading volume: 19.5 million shares exchanged hands Monday
Anthropic’s Claude Code Announcement: Anthropic published a blog post on Monday, February 23, 2026, explaining how Claude Code can streamline COBOL modernization. Key claims from the post:
“Modernizing a Cobol system once required armies of consultants spending years mapping workflows. Tools like Claude Code can automate the exploration and analysis phases that consume most of the effort in Cobol modernization.”
The tool can:
- Map dependencies across thousands of lines of code
- Document workflows
- Identify risks that would take human analysts months to surface
- Reduce modernization timelines from years to quarters
- Automate code analysis and implementation tasks
- Identify program entry points, trace execution paths, map data flows between modules, and document dependencies across hundreds of files
“Legacy code modernization stalled for years because understanding legacy code cost more than rewriting it. AI flips that equation,” Anthropic wrote.
Anthropic also released a Code Modernization Playbook alongside the tool announcement.
Market Context: The selloff came amid broader weakness in software stocks driven by AI-related disruption fears. A major software ETF is down 27% in 2026, 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. 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.
Broader Industry Impact:
- Accenture (NYSE:ACN): Shares fell roughly 6%
- Cognizant Technology Solutions (NASDAQ:CTSH): Shares fell roughly 6%
- Cybersecurity stocks: Tumbled Friday after Anthropic unveiled Claude Code Security, a new capability that scans codebases for security vulnerabilities
All three technology consulting firms have significant legacy system modernization practices that generate revenue from helping organizations update decades-old COBOL systems.
IBM’s Response: IBM defended its prospects, saying its core mainframe computer business offers a platform that provides the same quality of performance and security for various programming languages and not just COBOL.
IBM CEO Arvind Krishna said in July 2025 that IBM’s AI coding assistant for mainframes “has got very wide adoption.” In the majority of cases, customers are using it to understand their Cobol code base and decide what to modernize, Krishna said.
Historical Context: Anthropic’s announcement comes about three years after IBM itself suggested using AI to rewrite COBOL as Java and created a product called watsonx Code Assistant for Z to do it. IBM has been talking about using AI for COBOL modernization since 2013, according to The Register.
The perils and opportunities presented by COBOL migrations, and the potential for AI to accelerate refactoring of legacy apps, are not new to the technical community. Just last week, Infosys chairman Nandan Nilekani said the rise of AI means the cost of rewriting legacy apps has become affordable and made such moves imperative.
Expert Insights and Market Analysis
IBM’s Diversified Business Model: IBM’s business model is more diversified than headline reactions suggest. The company generates revenue from:
- Hybrid cloud infrastructure
- Red Hat enterprise solutions
- AI platforms under its watsonx brand
- Consulting services
- Mainframe systems
However, modernization consulting tied to legacy languages like COBOL has historically provided steady, high-margin enterprise work. If AI models can reduce project timelines from months to weeks, pricing power shifts. Consulting hours decline. Billing structures evolve.
That does not eliminate IBM’s role, but it changes the economics.
Wall Street’s View: Wall Street analysts note that IBM still holds deep enterprise relationships and mission-critical infrastructure contracts that are unlikely to disappear overnight. The question is whether AI compresses future revenue growth expectations.
Market analysts highlight that companies closely tied to enterprise spending are among the first to face investor scrutiny when AI adoption threatens labor-intensive workflows.
The Human Oversight Reality: While Claude Code promises faster COBOL modernization, experts caution that large-scale migrations remain complex. Regulatory approvals, operational risks, and testing requirements still require human oversight, slowing adoption despite AI efficiency gains.
“AI can assess which components are safe to move and which need careful handling,” Anthropic suggests. But the reality is that mission-critical systems in finance, government, and airlines cannot be migrated without extensive human review and testing.
The Shrinking COBOL Workforce: Hundreds of billions of lines of COBOL run in production every day, powering critical systems in finance, airlines, and government. Despite that, the number of people who understand it shrinks every year. The language’s staying power is legendary, but its very age has become a liability as the pool of engineers who can read and maintain it dwindles with each passing year.
The UK government last year bemoaned the big bills it pays to keep creaky COBOL code from crashing.
Broader Implications
1. AI as Creative Destruction: This episode reinforces a larger trend: generative AI is not just creating new markets. It is disrupting existing enterprise profit pools. Legacy modernization, once considered safe recurring revenue, may now face automation risk.
The selloff also highlights how quickly investor sentiment can shift when AI positioning appears threatened. IBM has marketed itself as an AI leader, but markets reward velocity and scale. Companies perceived as AI disruptors often receive premium multiples compared to incumbents adapting legacy portfolios.
2. Enterprise IT Budget Reallocation: If AI accelerates code migration, enterprises may redirect budgets toward higher-level AI integration rather than manual code refactoring. That could benefit infrastructure vendors and AI-native platforms more than traditional consulting arms.
3. SaaS Business Model Under Pressure: IBM’s share price dive came amid speculation that AI will ruin SaaS companies’ business models, an idea that is thought to be behind substantial share price decreases for the likes of Salesforce, Atlassian, Adobe, ServiceNow, and HubSpot.
The common thread: AI tools that allow users to “vibe code” — create custom applications without traditional software development — could reduce demand for pre-built software products and consulting services.
4. Market Sensitivity to AI Narratives: The fact that a single blog post from Anthropic triggered a $31 billion market value wipeout demonstrates how sensitive investors have become to AI disruption narratives. This is the second major selloff triggered by Anthropic announcements in less than a week — cybersecurity stocks tumbled Friday after Anthropic unveiled Claude Code Security.
Related History
IBM has reinvented itself multiple times over the past century, transitioning from hardware to services, then cloud and AI. The company’s acquisition of Red Hat in 2019 for $34 billion was widely seen as a pivot toward hybrid cloud leadership.
Previous technology transitions, including the shift from on-premise servers to cloud computing, also triggered skepticism before stabilizing. The current AI cycle may represent a similar inflection point.
In recent years, mainframe migration initiatives have been launched by AWS, Microsoft, IBM spin-out Kyndryl, and NTT. The idea that AI could accelerate these migrations is not new — IBM itself has been pitching AI-powered COBOL modernization since 2013.
What’s different now is the rapid maturation of AI coding tools and the velocity at which they are being adopted. “Vibe coding” — using AI to generate software code from natural language prompts — has moved from experimental to production-grade in just two years.
What Happens Next
Investors will be watching:
- Upcoming earnings guidance revisions — Will IBM lower expectations for consulting revenue?
- Commentary on AI’s impact to consulting pipelines — How is IBM positioning watsonx Code Assistant against Claude Code?
- Updates to IBM’s watsonx AI platform adoption metrics — Can IBM demonstrate that its own AI tools are gaining traction?
- Competitive positioning against Anthropic-backed tooling — Will IBM partner with or compete against AI startups?
Key Questions:
- Can IBM demonstrate that AI enhances rather than erodes its modernization revenue? If the company can show that watsonx Code Assistant is driving new consulting engagements rather than cannibalizing existing ones, the stock could stabilize.
- Will margin pressure become visible in quarterly results? If consulting hours and billable rates decline in Q1 2026 earnings (typically reported in late April), valuation multiples may compress further.
- How quickly will enterprises adopt AI-driven COBOL modernization? Despite the efficiency gains, large-scale migrations of mission-critical systems require regulatory approvals, operational testing, and risk management — processes that move slowly even with AI assistance.
Potential Outcomes:
- Short-term volatility, long-term stability: If IBM can demonstrate that its AI strategy offsets any disruption to its legacy consulting moat, the stock could recover. The company’s deep enterprise relationships and mission-critical infrastructure contracts provide some insulation.
- Structural repricing: If AI-driven automation genuinely compresses consulting revenue and margins, IBM’s valuation multiples could face permanent reset. The stock would trade more like a mature infrastructure provider than a high-margin consulting business.
- Shift to platform plays: IBM may pivot more aggressively toward selling watsonx AI tools and mainframe infrastructure rather than consulting hours. This would require investors to re-rate the business based on recurring platform revenue rather than services.
Conclusion
IBM stock’s sharp decline underscores a critical shift in the AI trade. Artificial intelligence is not simply lifting all enterprise software names. It is reshaping which revenue models are defensible.
Anthropic’s push into COBOL modernization highlights how even decades-old programming languages — and the lucrative consulting practices built around them — are now subject to automation pressure. For IBM, the path forward depends on proving that its AI strategy offsets any disruption to its legacy consulting moat.
The broader message for investors: AI is not just an opportunity. It is also a disruptor of entrenched enterprise revenue streams. Companies that cannot adapt quickly risk being left behind.
As one analyst put it: “The first five minutes is panic. What if it didn’t have to be?”
For IBM, the panic lasted all day Monday. The question now is whether it will last longer.
FAQ
Q1: Why did IBM stock drop today? IBM stock fell 13% on Monday, February 23, 2026, after Anthropic announced Claude Code, an AI tool designed to automate COBOL modernization — a decades-old programming language that powers critical enterprise systems and represents a steady revenue stream for IBM’s consulting business. Investors feared the tool could reduce demand for IBM’s legacy system modernization services.
Q2: How much did IBM stock fall? Shares declined by approximately 13%, closing at $223.35. This marked IBM’s worst single-day percentage loss since October 2000 and wiped over $31 billion from its market value. IBM shares have fallen 27% in February 2026, on track for the company’s worst monthly slide since at least 1968.
Q3: What is COBOL and why does it matter? COBOL (Common Business-Oriented Language) is a legacy programming language created in the late 1950s. It remains deeply embedded in financial institutions, government agencies, and airlines. An estimated 95% of ATM transactions in the U.S. use COBOL. Hundreds of billions of lines of COBOL run in production every day. IBM earns revenue helping modernize and maintain these systems.
Q4: Is IBM’s AI strategy at risk? Not necessarily, but investors are reassessing whether AI reduces demand for IBM’s traditional modernization services. IBM has its own AI coding assistant called watsonx Code Assistant for Z, and CEO Arvind Krishna said in July 2025 it has “very wide adoption.” The question is whether IBM’s own tools and deep enterprise relationships can offset the threat from AI startups like Anthropic.
Q5: Could IBM recover from this selloff? Future earnings guidance and AI adoption metrics will likely determine whether the decline represents short-term volatility or structural repricing. IBM still holds deep enterprise relationships and mission-critical infrastructure contracts. If the company can demonstrate that AI enhances rather than erodes its modernization revenue, the stock could stabilize. If margin pressure becomes visible in quarterly results, valuation multiples may compress further.
Sources and References
Bloomberg: IBM Shares Plunge as Anthropic Touts COBOL Modernization Efforts https://www.bloomberg.com/news/articles/2026-02-23/ibm-shares-plunge-as-anthropic-touts-cobol-modernization-efforts
CNBC: IBM is the latest AI casualty. Shares tank on Anthropic programming language threat https://www.cnbc.com/2026/02/23/ibm-is-the-latest-ai-casualty-shares-are-tanking-on-anthropic-cobol-threat.html
Yahoo Finance: IBM Sinks Most Since 2000 as Anthropic Touts Cobol Tool https://finance.yahoo.com/news/ibm-sinks-most-since-2000-210436663.html
