IBM Shares Plunge 11% as Anthropic's Claude Code Threatens Its COBOL Empire

IBM stock suffered its worst single-day decline in years on Monday, plummeting roughly 11% after Anthropic announced that its Claude Code tool can now automate the analysis and modernization of COBOL systems --- the legacy programming language that still powers 95% of U.S. ATM transactions and an estimated 220 billion lines of production code worldwide. The selloff accelerated through the afternoon as investors priced in the existential threat to one of IBM's most reliable revenue streams: its mainframe and COBOL consulting business.


What	IBM shares crater ~11% after Anthropic positions Claude Code as an AI-powered COBOL modernization tool
Why it matters	IBM's mainframe ecosystem generates billions in recurring consulting, hardware, and software revenue --- and COBOL modernization has been one of tech consulting's most lucrative practices
Triple threat	The COBOL bombshell compounds Trump's new 15% global tariff and ongoing DOGE federal contract cancellations
Who else is hit	Accenture, Cognizant, and other IT consulting firms with legacy modernization practices also declined
The bigger picture	IBM is now down 26% in February --- on track for its worst monthly decline since at least 1968

What Anthropic Actually Announced

Anthropic released a Code Modernization Playbook alongside a blog post positioning Claude Code as a tool that can transform COBOL modernization from multi-year consulting engagements into projects that take "quarters instead of years."

The specific capabilities Claude Code brings to COBOL modernization are precisely the tasks that generate the bulk of consulting revenue:

Dependency mapping across thousands of lines of code, including implicit dependencies through shared data structures and file operations
Workflow documentation by tracing data flows from input to output through processing pipelines
Risk assessment identifying high-coupling modules versus safe candidates for early modernization
Code translation converting COBOL logic into modern programming languages
Test generation creating function tests to verify migrated code produces identical outputs

Anthropic's key insight: legacy code modernization historically stalled not because rewriting was hard, but because understanding the legacy code cost more than rewriting it. Claude Code, the company argues, flips that equation by automating the analysis phase that human consultants bill hundreds of millions of dollars for.

Why This Threatens IBM's Core Business

The market's violent reaction reflects just how central COBOL is to IBM's bottom line. IBM operates what CNBC described as a "subscription-style business that generates billions in recurring revenue" from its mainframe ecosystem --- spanning z/OS hardware, enterprise software, and the consulting services that keep these systems running.

COBOL processes 80% of in-person financial transactions globally. Financial services, insurance companies, airlines, and government agencies all depend on decades-old COBOL systems that only a shrinking pool of specialists can maintain. That scarcity has been IBM's moat --- until now.

Wall Street had tolerated IBM's sluggish transformation because the mainframe division provided a reliable foundation. Anthropic's announcement forces a repricing of that assumption. If AI can credibly automate what large consulting teams do over multi-year engagements, the recurring-revenue narrative IBM has built its valuation on starts to crack.

The Triple Threat: COBOL + Tariffs + DOGE

The Anthropic bombshell didn't hit IBM in isolation. Monday's selloff was amplified by two additional headwinds that had already been pressuring the stock.

New 15% Global Tariff. IBM fell 4% in the morning session before the COBOL news even broke. After the Supreme Court struck down Trump's original tariff authority, the administration invoked the Trade Act of 1974 to impose a 15% global tariff for up to 150 days, reigniting trade policy uncertainty across every sector. The Dow dropped 821 points on the session.

DOGE Federal Contract Cancellations. IBM already lost 15 federal contracts worth approximately $100 million in future payments due to DOGE-related cutbacks. Cancelled awards spanned the Department of the Treasury ($17.5M), Health & Human Services ($3.4M), Commerce ($1.3M), and Education ($18M). While IBM's CFO James Kavanaugh downplayed the impact as a small fraction of its $30 billion consulting backlog, the cancellations add to the narrative of a company losing ground on multiple fronts.

Collateral Damage Across IT Consulting

IBM wasn't the only casualty. Accenture, Cognizant, and other IT services firms with significant legacy modernization practices also declined on the session. The legacy modernization market --- where services account for 58% of revenue and top integrators like IBM, Accenture, TCS, and Infosys anchor multi-year transformation deals --- is now being repriced as investors calculate how much of that consulting work AI can absorb.

Erste Group Bank had already revised IBM from "Buy" to "Hold" earlier in February, and the analyst downgrade now looks prescient. IBM's Consulting segment had already seen revenue decline 12.8% in its most recent quarter, per Gartner data.

The Numbers Tell the Story

The scale of IBM's February decline is historic:

Down ~11% on Monday (some reports say as high as 13-14% in intraday trading)
Down 26% in February --- on track for its worst monthly percentage decline since at least 1968, according to Bloomberg
Trading at $246.78, some 21.7% below its November 2025 high of $314.98
Down 15.3% year-to-date before Monday's session even opened

Retail investors on StockTwits are calling it a "generational buying opportunity", but analysts remain cautious. The question is no longer whether AI will disrupt enterprise consulting --- it's how fast.

The Irony

There's a bitter irony in IBM's position. The company has spent years positioning itself as an AI leader, from Watson to its current watsonx platform. But Anthropic's Claude Code doesn't compete with IBM's AI products --- it competes with IBM's consultants. The very AI revolution IBM has been trying to lead may end up cannibalizing the business that keeps the lights on.

For an industry that has billed untold billions helping enterprises understand and modernize their own code, the message from Anthropic is blunt: AI can do the hardest part of your job, faster and cheaper. The market, clearly, believes it.

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