Monday’s crash in IBM shares, which evaporated $31 billion from the company’s capitalisation, is more than a stock market correction. The 13.1% drop – the deepest since the dot-com bubble burst in 2000 – is a validation of the optimism around the ‘new face’ of Big Blue. IBM’s COBOL infrastructure-based foundations have ceased to be a safe haven and have become a target for attack.
Monopoly under fire from AI
The impact came from Anthropic. A startup backed by Google and Amazon has announced a tool called Claude Code to automate the modernisation of COBOL code. This is a direct attack on IBM’s ‘milking cow’. For decades, the Armonk-based giant has profited from the fact that global finance is trapped in 1960s code that almost no one can service anymore. IBM built its power on this technological captivity of banks and government agencies.
Anthropic has publicly pointed out to IBM what has been talked about in whispers in the industry: the number of engineers familiar with COBOL is falling dramatically, and artificial intelligence today can break that deadlock faster than z17 mainframes can depreciate. For investors, this signals that the barrier to entry that IBM has protected for half a century has just collapsed.
The beginning of the end of the mainframe?
Although IBM boasts an AI (watsonx) order book in excess of $12.5 billion, Monday’s panic shows that the market doesn’t quite believe in the transformation. Critics note that much of IBM’s growth in 2025 was based on upgrading legacy systems rather than real innovation.
It is worth contrasting this optimism with another perspective – business often chooses stability over revolution, but the current situation shows the other side of the coin: this attachment to mainframe stability has become a trap for IBM. As soon as a viable alternative emerged in the form of AI-supported migration, the customer loyalty on which IBM’s business model is based began to be valued as a risk rather than an asset.
Escape into debt and defence
IBM is trying to salvage the situation with aggressive acquisitions, such as the $11bn purchase of Confluent, raising concerns about the company’s continued debt burden. The ‘run to the front’ strategy towards defence contracts (the $151bn Project SHIELD) is a classic move by a corporation losing ground in the private sector and seeking refuge in slow government budget cycles.
The time when ‘nobody got fired for buying IBM’ is irretrievably gone. If Anthropic’s tools actually make the migration from COBOL work, IBM could be left with billions of dollars in non-working hardware and software that no one will need anymore.
