Shares of IBM, a giant of cloud computing and IT infrastructure equipment fell by 13.2% on Monday. up to $223.50 per piece, becoming another victim of rapidly developing AI technology. They were thus at the lowest level of market oversold among the 100 largest companies in the world (relative strength index of 22.84, while 30 is considered the market oversold level). On Tuesday, they rebounded, but only by 4.3%.
The signal for declines was given by Anthropic. It announced that its Claude Code tool can be used to modernize legacy COBOL-enabled systems. Claude Code can be used to automate the exploration and analysis work that accounts for most of the complexity of COBOL modernization, which is… a key area of IBM's business.
IBM has long sold mainframe systems optimized for large-scale transaction processing, where COBOL is often used.
95 percent US ATM transactions in COBOL
COBOL, short for Common Business-Oriented Language, is the dominant coding system developed in the late 1950s, often used in business data processing, used in payment processing and retail transaction systems. According to Anthropic estimates as much as 95 percent ATM transactions in the US are conducted in COBOLmaking it a prime target of the economic revolution in artificial intelligence, writes CNBC.
“Hundreds of billions of lines of COBOL code run in production every day, powering key systems in finance, airlines and government. Yet the number of people who understand it is decreasing year by year,” Anthropic wrote in a blog post on Monday. “Artificial intelligence is great at streamlining tasks that once made COBOL modernization uneconomical,” it added.
Artificial intelligence will do it cheaper
Claude Code can help modernize COBOL codebases by mapping dependencies between thousands of lines of code, documenting workflows, and identifying threats that “would take analysts months to spot,” Anthropic says.
“Modernizing old code has stagnated for years because understanding the old code cost more than rewriting it. Artificial intelligence is turning this around,” we read in the blog post.
The latest approach builds on Anthropic's efforts to revolutionize outdated coding systems and on companies' digital transformation efforts, which it says are being held back in part by declining developer productivity and “technical debt.” Technical debt refers to the future costs of simplified software development solutions that incur higher maintenance costs in the future.
IBM is the latest company whose shares have fallen on concerns about artificial intelligence, which have rattled investors in recent weeks and contributed to a volatile “sell first, ask questions later” trading environment, writes CNBC.
Shares of many cybersecurity companies tumbled on Friday after Anthropic unveiled a new feature built into Claude Code called Claude Code Security, which the company says allows it to scan code bases for vulnerabilities and find vulnerabilities in software for human analysis. The sector remained under pressure during Monday's session.
After Monday's sell-off, IBM shares lost more than 24 percent. since the beginning of the year. On Tuesday, that loss narrowed to 21%.
