New York, February 24:  Shares of International Business Machines (IBM) plummeted 13.2% on Monday and continued to see heavy pressure into Tuesday, February 24, marking the company’s steepest single-day decline since the year 2000. The sell-off, which wiped approximately USD 30 billion off the company’s market capitalisation, was triggered by a blog post from the AI startup Anthropic. The post detailed how its latest AI tool, Claude Code, can now automate the modernisation of COBOL, a legacy programming language that has served as a lucrative "moat" and core revenue driver for IBM’s mainframe and consulting businesses for decades.

The market reaction reflects growing investor anxiety that generative AI is transitioning from a growth catalyst to a disruptive threat for legacy tech giants. For years, IBM has dominated the market for maintaining and updating the hundreds of billions of lines of COBOL code that still power 95% of ATM transactions and critical systems for airlines and governments. Until now, modernising these systems required "armies of consultants" and years of manual labor, a high-margin business model that Anthropic claims its AI can now compress from years into mere quarters. Stocks To Buy or Sell Today, February 24, 2026: Bharti Airtel, Waaree Energies and Lupin Among Shares That May Remain in Focus on Tuesday.

The 'COBOL Moat' Under Siege

COBOL (Common Business-Oriented Language) is a 65-year-old programming language that remains the backbone of the global financial system. Because the workforce proficient in COBOL is aging and retiring, IBM has long commanded a premium for its specialised consulting services and its Z-series mainframes designed to run these specific workloads.

Anthropic’s announcement directly targets this ecosystem. By using AI to automatically map dependencies, document workflows, and identify risks across thousands of lines of cluttered legacy code, Claude Code threatens to commoditise a service that was previously cost-prohibitive. Analysts fear this could accelerate a migration away from IBM’s expensive hardware toward cloud-native environments managed by competitors like AWS or Azure. BPCL Share Price Today, February 24, 2026: Stocks of Bharat Petroleum Corporation Limited Rise by 0.60% in Early Trade, Check Latest Price on NSE.

The sharp drop in IBM’s stock price, down 27% in February alone, is part of a broader "AI substitution panic" sweeping the software sector. Last week, cybersecurity firms like CrowdStrike and Cloudflare saw similar sell-offs after Anthropic introduced AI-driven security features.

Investors appear to be recalibrating the valuations of traditional IT service firms, including Accenture and Cognizant, which also saw their shares decline following the news. The prevailing fear is that if AI can handle the "heavy lifting" of digital transformation, the high billing rates and long-term contracts that sustain these firms may no longer be defensible.

IBM’s Strategic Response

In response to the disruption, IBM has pointed to its own AI capabilities, specifically its watsonx Code Assistant, which is designed to refactor COBOL into modern languages like Java. IBM’s leadership argues that their tool is superior because it is integrated directly into their hardware stack, offering better security and reliability for mission-critical banking operations.

However, the market remains skeptical of whether IBM can cannibalise its own high-margin consulting revenue fast enough to fend off leaner AI competitors. Critics on Wall Street note that while IBM’s Q4 2025 results were robust, the "Anthropic threat" introduces a structural risk to the company's long-term growth visibility.

Despite the stock market volatility, some industry veterans caution that "vibe coding" (AI-generated code) may not yet be ready for the rigorous standards of global finance. A bug in a COBOL-to-Java migration could result in catastrophic failures in ATM reconciliations or government payouts. While AI has made modernisation "affordable," the legal and operational risks of moving away from the "devil they know", IBM’s proven mainframe architectur, may slow the actual pace of adoption regardless of the stock price movement.

TruLY Score by LatestLY
Rating:3

TruLY Score 3 – Believable; Needs Further Research | On a Trust Scale of 0-5 this article has scored 3 on LatestLY, this article appears believable but may need additional verification. It is based on reporting from news websites or verified journalists (Business insider), but lacks supporting official confirmation. Readers are advised to treat the information as credible but continue to follow up for updates or confirmations

(The above story first appeared on LatestLY on Feb 24, 2026 10:20 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).