It’s an open secret (that is, not many individuals appear to know) that the establishments preserving the world monetary system turnig over run code that is historical, barely understood, and frighteningly laborious to substitute. Now, AI is lastly making that drawback solvable – and the market has responded with a actuality examine for certainly one of expertise’s oldest names.
IBM shares recorded their worst single-day drop in additional than 25 years earlier this week, plunging 13% after AI startup Anthropic stated its Claude Code device can speed up COBOL modernisation – the type of painstaking, costly legacy work that has underpinned a portion of IBM’s consulting income for years.
An Anthropic weblog stated that “modernising a COBOL system as soon as required armies of consultants spending years mapping workflows,” and argued that instruments like Claude Code can now automate the exploration and evaluation phases that devour most of the effort in COBOL modernisation. That single declare was sufficient to ship traders reaching for the promote button.
COBOL is larger than most realise
To know why the response was so sharp, it helps to perceive simply how entrenched COBOL stays. Tons of of billions of strains of COBOL code run in manufacturing day by day, powering important methods in finance and authorities sectors. The language handles an estimated 95% of ATM transactions in the US alone.
The deeper drawback isn’t the code itself – it’s the individuals who perceive it. The variety of builders who perceive COBOL continues to shrink as the workforce that constructed these methods has largely retired. That expertise shortage is exactly what made COBOL modernisation so costly for thus lengthy, and what made giant consulting engagements – the type IBM and rivals like Accenture and Cognizant constructed worthwhile practices round – primarily unavoidable.
Anthropic argues that AI flips this equation completely. Claude Code works by mapping dependencies in 1000’s of strains of code, documenting workflows, figuring out dangers quicker than human analysts, and offering groups with deep insights for knowledgeable decision-making. The corporate says groups can now modernise COBOL codebases in quarters not years.
IBM was already right here
What the market’s response could also be overlooking is that IBM itself has been making this argument for a while. Anthropic’s put up comes about three years after IBM itself suggested utilizing AI to rewrite COBOL as Java and created a product known as “watsonx Code Assistant for Z” to do it. IBM CEO Arvind Krishna stated as lately as July 2025 that the firm’s AI coding assistant for mainframes “has obtained very adoption,” with the majority of shoppers utilizing it to perceive their COBOL codebase and resolve what to modernise.
IBM defended its place on Monday, saying its mainframe platform delivers the similar high quality of efficiency and safety no matter programming language – COBOL or in any other case. And analysts have been fast to add nuance to the panic.
Evercore ISI analyst Amit Daryanani famous that “purchasers already had the choice to migrate from the mainframe, but they are sticking with the platform,” suggesting the worry of displacement could also be outrunning the actuality.
The broader sample
IBM wasn’t alone in taking a success. Accenture and Cognizant additionally declined following the information – an indication that traders are the whole consulting mannequin round legacy modernisation, not IBM’s mainframe {hardware} enterprise. Simply final week, cybersecurity shares bought off sharply after Anthropic introduced Claude Code Safety, a device that scans codebases for vulnerabilities.
The sample is changing into acquainted: every new AI means announcement triggers a reassessment of which current income streams is likely to be compressed, and the market costs in worry instantly.
IBM didn’t keep quiet. Rob Thomas, the firm’s Senior Vice President and Chief Industrial Officer, pushed again immediately in the aforementioned blog post, drawing a line the market appeared to have missed: “Translating code is one factor. Modernising a platform is one thing else completely. The 2 are not the similar, and the hole between them is the place most enterprises run into hassle.”
His argument is value sitting with. The worth IBM’s mainframe delivers, Thomas contends, has nothing to do with COBOL as a language – it lives in the vertically built-in stack beneath it: z/OS, transaction processing structure, quantum-safe encryption, and many years of hardware-software optimisation that no code translation device touches.
Anthropic’s Claude Code, in his studying, is fixing an actual drawback – simply not the one which issues most for enterprises working IBM Z. He additionally raised a degree that complicates the headline narrative additional: roughly 40% of COBOL truly runs on Home windows, Linux, and different distributed platforms – not mainframes in any respect.
A lot of what’s being framed as an IBM mainframe story is partly a distributed methods drawback that has been folded right into a mainframe headline. IBM’s personal purchasers are already making the case.
Royal Financial institution of Canada has used IBM’s watsonx Code Assistant for Z to map dependencies and construct modernisation blueprints for core functions. The Nationwide Organisation for Social Insurance coverage reported a 94% discount in time to analyse legacy COBOL code utilizing the similar device – slicing an eight-hour activity to roughly half-hour.
Whether or not Monday’s selloff was a good verdict or a reflexive one, the underlying change is actual: AI is making COBOL modernisation economically viable for the first time in many years. The query IBM is asking – and the market hasn’t totally answered – is whether or not that’s a menace to its enterprise or an acceleration of the transformation it’s already main.
See additionally: Hitachi bets on industrial expertise to win the physical AI race
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