IBM Business Model At Risk? Anthropic's Claude Can Automate COBOL

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IBM just had its worst trading day in 26 years. 

On February 23, 2026, $IBM closed down 13.2%, ending the session at $223.35. That one-day move wiped out more than $31 billion in market value. It was the steepest single-day decline since 2000, right in the middle of the dot-com collapse.

The catalyst? A blog post published by Anthropic, announcing that its Claude Code tool can automate COBOL modernization, a business that IBM has owned, and been paid handsomely for, for decades.

That's the moment investors need to understand. This wasn't an earnings miss. It wasn't a fraud allegation. It was a competitive threat signal so credible that Wall Street moved first and asked questions later.

For investors, this matters more than the IBM headline itself.

COBOL is everywhere. It handles an estimated 95% of ATM transactions in the US.

COBOL is a programming language developed in 1959. And it still runs an estimated 95% of ATM transactions in the U.S., along with the core systems of every major bank, insurance company, airline, and government agency you've ever dealt with.

Maintaining and modernizing COBOL systems has been one of IBM's most durable revenue streams. The work is complex, specialized, and expensive. Teams of consultants spend years on a single migration project. That business model has been largely untouchable, until now.

Here's what Anthropic wrote in its Monday announcement:

And the line that really stung IBM's investors:

Years to quarters. That's not an incremental efficiency gain. That's a structural threat to a multi-billion-dollar consulting business.

Let's be clear about the scale here.

IBM's share price opened February at approximately $306. By the close on February 23, it was at $223.35. That's a 27% collapse in a single month, on track for IBM's worst monthly performance since at least 1968.

IBM isn't a startup with a speculative valuation. This is a 115-year-old institution with deep enterprise relationships, a massive services business, and a growing AI segment of its own. IBM even launched its own COBOL modernization AI tool in 2023. Its CEO pointed to "very wide adoption" of that tool as recently as July 2025.

None of that mattered on Monday.

Investors weren't waiting for proof that Claude Code works better than IBM's tool. They were pricing in the risk that the consulting model itself is under threat and that's a much harder problem for IBM to solve than any single product comparison.

Here's the part that matters for your portfolio positioning.

IBM's collapse didn't happen in isolation. Software stocks have been the worst-performing sector in the U.S. market since the start of 2026. The iShares Expanded Tech-Software Sector ETF (IGV) is down 27.1% YTD, on track for its biggest quarterly drop since the 2008 financial crisis.

Let that sink in. A major software ETF is tracking the same monthly loss as IBM in the same month. This is not a single-stock story.

The broader pattern is this: AI tools from Anthropic, OpenAI, and others are systematically threatening the business models of legacy enterprise software companies. Not all at once, and not completely but investors are no longer willing to give these companies the benefit of the doubt. Every new AI announcement is now read as a potential business threat, and the market is repricing accordingly.

IGV's top five holdings: Microsoft, Palantir, Oracle, Salesforce, and AppLovin are on average down 40% from their respective all-time highs over the past six months.

Other ETFs caught in the same wave:

For context, the Nasdaq-100 (QQQ) is down roughly 6.8% YTD. Software is underperforming the broader tech index by more than 20 percentage points in less than two months.

IBM didn't stay silent. Rob Thomas, the company's CCO, published a direct rebuttal on the same day.

His argument: translating COBOL code is not the same as modernizing the underlying mainframe system. 

That's a fair point and it's technically accurate. Migrating a 40-year-old COBOL banking system involves far more than converting lines of code. There are integrations, data structures, compliance requirements, and operational dependencies that no AI tool will resolve with a single command.

But here's what that argument misses: the most expensive and time-consuming part of any modernization project is the analysis phase, mapping what the code does, understanding the dependencies, documenting the logic. 

Anthropic claims Claude Code automates precisely that phase.

If that claim holds up at enterprise scale, IBM's consulting teams become significantly less necessary for the early stages of large projects. It’s a real threat to the margin profile of its consulting arm.

Three things every ETF investor should be tracking:

1. IGV support levels. The ETF hit a 52-week low of $79.65 in early February. If it closes below that level, momentum selling accelerates. The next technical support sits near the 2022 correction lows. Options data shows heavy call buying near $83, which suggests institutional buyers are positioning for a bounce but not yet a recovery.

2. Enterprise customer behavior. The real test isn't what Anthropic says Claude Code can do. It's whether large banks, insurers, and government agencies actually reduce their IBM consulting contracts. That data won't surface in Q1 earnings but it will show up in Q3 and Q4 order books.

3. AI hardware vs. AI software divergence. The clearest trade in this environment is the gap between AI infrastructure winners (hardware, chips, data centers) and AI disruption losers (legacy enterprise software). ETFs like BOTZ (Global X Robotics & AI) are up 3.2% YTD while IGV is down 27%. That spread is not a coincidence, it reflects exactly where institutional capital is rotating.

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IBM's 13% single-day drop is the most visible data point in a broader repricing story. 

Software ETFs are telling investors something clear: the market believes AI will compress margins, shrink consulting revenue, and fundamentally change how enterprise software is built and maintained.

That doesn't mean every software ETF position is a loss. But it does mean the risk calculus for legacy-exposed software holdings has changed permanently.

Position accordingly.

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Disclaimer: This is not financial or investment advice. Do your own research and consult a qualified financial advisor before investing.