IBM shares experienced their steepest single-day decline in over two decades, falling 13.15% to close at $223.35 on February 23, 2026. This sell-off, which wiped out over $31 billion in market value, was triggered by a blog post from AI research firm Anthropic about its "Claude Code" tool. The tool is designed to modernize software written in COBOL, a decades-old programming language heavily used in critical systems that often run on IBM mainframes.
Investors are concerned that AI-driven tools could significantly reduce the need for large, multi-year consulting engagements, thereby pressuring IBM's long-term services revenue streams. IBM has historically generated substantial revenue from maintaining and upgrading these legacy COBOL systems through its consulting and infrastructure businesses. The announcement rattled investors who are now reassessing the long-term defensibility of the company’s mainframe and consulting franchises in the era of rapid AI advancement.
Despite the market turmoil, some analysts, like Jefferies and Trefis, believe the sell-off was overdone. They maintain that IBM has been preparing for AI disruption with its own tools, like Watsonx Code Assistant for Z, and that its core growth drivers are increasingly in hybrid cloud and AI rather than legacy COBOL maintenance. IBM's latest financial results showed operational stability, with full-year 2025 revenue of $67.5 billion, up 8%, and fourth-quarter 2025 revenue of $19.7 billion, up 12% year-on-year. The company also holds about $15 billion in cash and has an average analyst price target of $327, implying nearly 50% upside.
