International Business Machines Corp.

shares plunged on Monday, after the

artificial intelligence

startup

Anthropic

said its Claude Code tool can help with

modernizing COBOL

, a dated programming language that’s mainly run on IBM computers.

Shares sank

as much as 13 per cent, their biggest intraday drop since March 2020. With the decline, the stock is now down 26 per cent in February, on track for its biggest one-month percentage decline since at least 1968, according to data compiled by Bloomberg.

“

Modernizing a COBOL system

once required armies of consultants spending years mapping workflows” but “tools like Claude Code can

automate the exploration and analysis phases

that consume most of the effort in COBOL modernization,” Anthropic wrote in a blog post.

Most of the mainframe computers that run COBOL are made by IBM, and the selloff made the company the latest to see heavy selling pressure on the fear that AI will weigh on the growth prospects of legacy companies.

A significant chunk of IBM’s business remains tied to its mainframe business. These massive customer-owned servers run applications on COBOL, an older coding language than those in common in the rest of the technology industry. Mainframes are common among customers with high reliability needs, such as finance or government.

On Friday, Anthropic introduced a new security feature into its Claude AI model, spurring widespread selling of cybersecurity stocks. Software stocks have been broadly weaker this year on concerns over AI-related disruption; a major software ETF is down 27 per cent this year, 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 Inc. Investors are fretting that the ability to “

vibe code

” — use AI to write software code — will allow users to create their own applications, diminishing demand for legacy products, weighing on companies’ growth, margins, and pricing power.

—With assistance from Brody Ford.

Bloomberg.com

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