IBM Stock Today: February 26 – Claude Code Threat Hits COBOL
Claude Code is in focus after Anthropic said the tool can automate key steps in COBOL modernization. Shares of IBM sank 13% on the headline and sit more than 24% lower year to date. This matters because mainframe and modernization services are a key IBM profit stream. For Singapore investors, the question is whether this is a short-term shock or a lasting shift in client spending. We review the threat, current valuation, technical picture, and practical next steps.
Why Anthropic’s Claim Matters for IBM
Anthropic says Claude Code can speed up COBOL-to-modern language work by automating analysis, translation, and testing steps. That proposition suggests shorter project cycles and lower costs for enterprises. Investors fear compression of services revenue tied to complex conversions, which historically require large teams and long timelines. Early reports sparked the sharp selloff in IBM shares. See reporting at CNBC for details source.
IBM’s mainframe ecosystem and consulting units support mission-critical workloads where COBOL is common in banks, insurers, and airlines. If Claude Code reduces manual effort, billable hours and pricing power could fall. That pressure would likely show up in Consulting margins and Infrastructure software support. Bloomberg also highlighted how investors linked the tool to IBM’s core franchise risk source.
Enterprises will still demand code assurance, compliance, and regression testing. Many COBOL programs are deeply tied to business rules that need human review. That means Claude Code could shift work from writing code to verification and integration. The risk is meaningful, but adoption curves, governance, and vendor partnerships will shape the impact over multiple quarters, not days.
Stock, Valuation, and Technicals After the Slide
Momentum indicators show stress. RSI is 32.47, nearing oversold. CCI is -103 and Stochastic %K is 11.66, both weak. ADX at 29.92 signals a strong trend, while the price leans toward the lower Bollinger band. ATR at 11.61 points to wide daily swings. For Singapore traders, position sizing and wider stops may be prudent in this volatility.
On trailing metrics, the stock trades at a price-to-earnings near 21.06 and price-to-book near 6.83. Dividend yield is about 2.82%, with a payout ratio near 59%. Free cash flow yield is roughly 5.53%. Leverage is notable, with debt-to-equity near 2.06 and interest coverage around 6. Margins remain solid for software and services.
Street views are mixed: 12 Buy, 6 Hold, 5 Sell; consensus sits at Neutral. Our system grade is B+ with a BUY suggestion, but company-level rating guidance is Neutral, reflecting valuation and debt factors. The next earnings is on 22 April 2026. Guidance on mainframe services and modernization pipelines will be the key read-through.
What It Means for Singapore Investors
Dividends are paid in USD, but the cash you receive is in S$ after conversion. Yield near 2.82% is currency-neutral, while your S$ returns depend on USD/SGD moves and broker FX fees. Consider the FX impact on income planning and whether you want separate USD holdings to avoid repeated conversions.
If you believe Claude Code will compress services, use smaller entries and dollar-cost averaging. Traders can wait for RSI to reclaim mid-40s or a break above the 50-day average. Long-only investors may pair exposure with a technology ETF to blunt single-name risk. Keep allocations modest until post-earnings clarity.
Near term, watch management commentary on modernization demand, any partnerships or counter-offers versus Claude Code, and client case studies. April results and backlog trends will set the tone. Also track Red Hat growth and consulting margins. A rebound in momentum with improving breadth would support a recovery into midyear.
Final Thoughts
Claude Code has placed IBM’s modernization franchise under a spotlight. The market is pricing faster automation of COBOL work and possible pressure on services revenue. Valuation is not stretched, but technicals remain weak, and leverage is a watchpoint. For Singapore investors, focus on three items: evidence of client wins or losses tied to modernization, IBM’s April guidance on mainframe and consulting margins, and price action improving from oversold. Scale positions, avoid oversized bets, and be mindful of USD/SGD effects on returns. If fundamentals stabilize and momentum turns, a staged entry can work. If adoption risk accelerates, keep cash ready and reassess after earnings.
FAQs
What is Claude Code and why did it hit IBM stock?
Claude Code is Anthropic’s coding tool that can automate key steps in COBOL modernization. Investors worry it shortens projects and reduces services revenue tied to legacy systems. That fear drove a sharp one-day drop and has kept sentiment weak as markets gauge how fast enterprises adopt it.
Is IBM stock a buy after the 13% drop?
It depends on risk tolerance. Technicals are near oversold, the dividend yield is about 2.82%, and Street views are mixed (12 Buy, 6 Hold, 5 Sell). Many investors may wait for April earnings and signs of stabilizing demand before adding, or use small tranches to manage volatility.
How could COBOL modernization impact IBM’s revenue?
If automation from tools like Claude Code reduces manual effort, consulting hours and pricing could fall. Offsetting factors include verification needs, compliance, and integration work that still require people. The net effect will hinge on enterprise adoption speed, IBM partnerships, and how the company repositions services.
What should Singapore investors consider with USD exposure?
Dividends and price moves are in USD, so SGD returns depend on FX rates and broker fees. Consider keeping USD cash to reduce conversion costs, or use SGD-hedged instruments where available. Note US trading hours will mean overnight moves in Singapore, which can affect execution and risk control.
When is IBM’s next earnings report?
IBM is scheduled to report on 22 April 2026. Investors should focus on commentary around mainframe demand, consulting margins, and any customer updates related to modernization projects. Guidance on services pipelines and AI-related productivity will be key for near-term sentiment and valuation.
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.