Global technology giant International Business Machines (IBM) has become the latest casualty of artificial intelligence, after its stock fell 13% on Monday's trade in the New York Stock Exchange, wiping $40 billion off the company's overall market value.
The sharp fall in IBM came on the back of Anthropic stating that its Claude Code can be used to modernise legacy systems that run COBOL. The AI-giant added that Claude Code can be used to automate processes that drive most of the complexity in COBOL modernisation, which is inherently an IBM business.
The idea that Claude Cowork can simply take over most of the processes linked to the COBOL ecosystem put immense pressure on the IBM stock, which ended the day lower by nearly 13.2%, at $223.35.
What is COBOL?
COBOL, or Common Business-Oriented Language, is one of the oldest programming languages still in use today. Created in 1959, it was designed specifically for business, finance and administrative systems.
COBOL is designed for data processing and is particularly known for its highly-readable, English-like syntax. It is ideal for batch processing and large-scale transaction systems. Even today, a huge share of the world's core financial institutions, such as banks and credit card networks, are run on COBOL.
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How is IBM positioned in COBOL?
IBM is a central player in the COBOL ecosystem as it owns the mainframe platform on which the code runs. The company earns recurring revenue from COBOL workloads, with many organisations paying IBM for mainframe hardware refresh cycles, software licenses and performance upgrades.
Most importantly, IBM leads COBOL modernisation. The company's strategy isn't to 'kill COBOL' but to connect it to modern-tech. The company is actively exposing COBOL programs as APIs, integrating them with cloud apps and even running the code alongside Java/AI workloads.
But when Anthropic confirmed that Claude Code can also help in modernising COBOL, it put pressure on IBM's stock, with many fearing that one of the company's biggest business models is exposed to AI.
“Hundreds of billions of lines of COBOL run in production every day, powering critical systems in finance, airlines, and government. Despite that, the number of people who understand it shrinks every year,” Anthropic said in a blog post on Monday. "AI excels at streamlining the tasks that once made COBOL modernisation cost-prohibitive."
“Legacy code modernisation stalled for years because understanding legacy code costs more than rewriting it. AI flips that equation,” Anthropic added.
Thanks to the massive drawdown on Monday, IBM has become the latest victim of Claude's capabilities within the IT ecosystem that has put immense pressure on global legacy IT players, with even Indian companies like Infosys, TCS and Wirpo feeling the brunt.
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