IBM Stock Slides 13% as Anthropic’s AI Programming Threat Sparks Selloff
On February 23, 2026, IBM Stock plunged sharply, recording its worst daily percentage decline in more than 25 years, dropping over 13% in a single trading session after investors reacted to new developments in artificial intelligence.
Here is what happened: Anthropic, an AI research company known for its large language model Claude, announced that its AI tool Claude Code can effectively modernize COBOL systems, the decades-old programming language that runs critical banking, insurance, and government applications, most of which operate on IBM mainframes.
The market interpreted this as a direct threat to IBM’s long-standing business in legacy system modernization consulting, a high-profit segment that has supported the tech giant for decades. The selloff accelerated as traders rapidly adjusted their portfolios, causing not only IBM shares to tumble but also weighing down the broader software sector, as fears grew that AI could disrupt traditional technology services.
What Led to the Sharp Drop?
Investors were suddenly concerned that automation-driven tools powered by advanced AI models could reduce the need for costly consulting work and human labor previously required to update COBOL codebases. Many had expected IBM’s own AI platform, Watsonx, to maintain a competitive advantage.
The result was a dramatic decline and a brutal reassessment of IBM’s business model, with trading volumes spiking as both institutional and retail investors exited positions.
Market Reaction and Investor Sentiment
Key Market Data on IBM Share Collapse
Here’s how the market reacted on the day of the selloff:
- IBM stock lost 13% intraday, wiping out more than $30 billion in market capitalization, one of the worst single-day losses since October 2000.
- Stocks briefly traded as low as $223 per share during the session, compared to around $257 before the selloff began.
- IBM’s share decline contributed to a broader drop across the S&P 500 and Nasdaq, with tech stocks feeling broad pressure.
- The drop has pushed IBM toward its worst month in decades, with February losses approaching nearly 27% year-to-date, the steepest monthly decline since at least 1968.
This sharp fall has shaken investor confidence in IBM’s short-term prospects and cast serious doubts over the sustainability of its legacy-focused revenue streams.
Simple Questions Investors Are Asking
Why did IBM’s stock fall so much?
Investors reacted to AI advances that could automate tasks previously done by IBM consultants, potentially cutting into a key revenue segment of the company.
Is this a sign of broader tech disruption?
Yes, AI-related fears are causing selloffs across software and cybersecurity sectors, as automation tools become more capable.
Is COBOL really that important to IBM?
COBOL systems are critical to many industries and have been a stable source of consulting revenue for IBM for years. New AI tools could reduce dependency on human consultants.
Anthropic’s AI Tool and the Competitive Threat
What Claude Code Does
Anthropic’s Claude Code is designed to automate the modernization and analysis of COBOL codebases, including mapping large systems, documenting dependencies, identifying risks, and performing tasks that previously required teams of specialist engineers and months of effort.
This type of automation has significant implications for software development workflows and the modernization of legacy systems by large enterprises.
According to Anthropic’s blog post, AI tools can reduce modernization timelines from years to just quarters, sparking a fresh wave of concern among service providers that have traditionally charged high fees for these projects.
Investor Risk Perception
Wall Street analysts note that automation of traditionally labor-intensive processes compresses revenue expectations for legacy businesses, while AI capabilities evolve rapidly. The threat is not necessarily that IBM will go out of business, but that its valuation may increasingly reflect declining revenue from legacy segments unless offset by faster growth in areas like hybrid cloud and AI services.
The Broader Impact on the Tech Sector
The selloff in IBM’s shares did not happen in isolation. Fears about AI disruption rippled through several parts of the market:
- Cybersecurity stocks such as CrowdStrike and Datadog saw declines as AI code understanding and risk detection tools threatened traditional security revenue.
- Software and SaaS stocks broadly suffered as investors adopted a risk-off stance.
- Macro concerns, such as global tariff uncertainty, compounded bearish sentiment across markets.
This shift shows that AI developments can quickly impact even well-established companies with diversified portfolios if perceived to threaten core revenue streams.
Can IBM Recover, and What Analysts Say?
Some analysts and investor communities see the decline as overdone or a buying opportunity, but the path to recovery depends on broader adoption of IBM’s growth areas.
Bullish Analyst Views
Certain firms have reiterated buy ratings with price targets well above current levels, arguing that:
- IBM’s hybrid cloud and AI investments still hold significant growth potential.
- Revenue from services outside COBOL modernization, such as enterprise software, supports long-term prospects.
- The selloff may be short-lived if markets reassess IBM’s multiple revenue streams.
Risk Factors to Watch
Investors are cautioned to monitor:
- Ongoing developments in AI automation and competitive tools similar to Claude Code.
- Revenue contribution changes in IBM’s consulting business related to legacy modernization.
- Broader macroeconomic and tariff environments could continue to pressure tech stocks.
Social Media Reactions From the Market
Here’s how traders and analysts responded on social platforms within hours of the IBM Stock plunge:
This tweet shows real-time reactions from traders interpreting the AI threat to IBM’s business model.
Sentiment among market observers highlighted valuation shifts driven by AI disruptions in legacy sectors.
Retail investors recalibrated positions based on risk to income streams and valuation metrics.
Noise from market analysts emphasized short-term volatility and long-term strategic repositioning.
Conclusion
The IBM Stock plunge of more than 13% marks a powerful reminder of how AI advancements can reshape investor expectations. A technology once seen as supportive of enterprise growth has now become a core source of disruption.
Investors and analysts are now closely watching how IBM responds to competitive threats, adapts its offerings, and manages revenue pressures from legacy business segments. Simultaneously, the broader tech market is recalibrating valuations as AI continues to evolve, driving significant shifts in long-term growth narratives.
What remains clear is that markets are now pricing in not just current earnings, but future competitive landscapes shaped by AI innovation.
FAQs
IBM’s shares fell after AI startup Anthropic announced that its Claude Code tool can automate the modernization of COBOL systems, threatening IBM’s legacy consulting revenue.
The tool speeds up tasks traditionally done by human consultants, which could reduce demand for long-term consulting engagements, but it does not fully eliminate the need for expert guidance.
Investors should weigh risks from legacy business threats against growth prospects in AI and cloud; long-term value depends on execution and market adaptation.
Disclaimer
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.