IBM’s stock stumbled on Monday to its largest single-day loss since the dot-com bubble burst, after Anthropic announced an AI tool it claimed would streamline updates for a decades-old business software, the latest development in recent weeks from Anthropic to fuel a stock selloff.
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Key Takeaways
- Shares of IBM plunged 13.1% to $223.39 as trading closed Monday, marking the stock’s largest single-day loss since October 2000 (15.5%).
- Anthropic, in a blog post on Monday, announced a tool for its Claude Code that would help modernize COBOL code, a programming language developed in the 1960s that processes about 95% of ATM transactions in the U.S., while also handling Social Security payments and other systems used by financial and airline firms, among others.
- IBM helped popularize COBOL and still provides systems that run it, but Anthropic argued the language is taught by only a “handful” of universities, and finding engineers who can read it “gets harder and harder every quarter.”
- Anthropic said that, despite “hundreds of billions” of lines of COBOL run in production every day, the number of people who understand it “shrinks every year,” arguing AI would quickly modernize the legacy code.
Big Number
$31 billion. That’s about how much was cut from IBM’s market value after its shares declined on Monday, falling from $240.8 billion on Friday to roughly $208.7 billion.
Key Background
Anthropic has unveiled a slew of updates for its AI tools this month, fueling selloffs across several industries. The Google- and Amazon-backed AI startup announced plugins for its Claude Cowork AI agent that Anthropic claimed could automate tasks for customer service, product management, marketing, legal and data analysis, among others, while also generating financial statements, researching sales prospects and helping prepare for sales calls. That helped spread concerns that AI could soon threaten common business processes, while also sending global software stocks down. Another tool released by Anthropic last week sparked a selloff for cybersecurity stocks, including CrowdStrike and Zscaler, which fell about 9% each on Monday, after the company said its tool could scan software code for vulnerabilities.
Contra
Several economists have warned that investors may be overreacting to recent developments in AI. LPL Financial analyst Adam Turnquist wrote last week that volatility across software and AI-exposed industries reflected a “market narrative” shift among investors and not because revenue or profits declined. JPMorgan earlier this month said the view that AI companies would disrupt the software industry was “broken logic” and that investor concern was overblown, while WedBush Securities analyst Dan Ives told CNBC a broader selloff for software stocks was the “most disconnected trade I’ve ever seen in my career on Wall Street.” Ives argued that AI developments would instead boost companies.
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