IBM Shares Plunge 13% in Biggest Single-Day Fall in 25 Years Amid AI Disruption Fears

IBM Stock Sees Sharpest Drop Since 2000​

Shares of IBM recorded their steepest single-day decline in more than 25 years on February 24, after fresh concerns emerged over how artificial intelligence could disrupt one of the company’s most stable revenue streams.

The stock tumbled 13.2 per cent to close at $223.35, marking its biggest one-day fall since October 18, 2000. The sharp correction comes as investors reassess the long-term impact of AI on enterprise software and IT services businesses.

So far this year, IBM shares have declined approximately 25 per cent, reflecting mounting uncertainty over how quickly AI-driven automation could reshape traditional IT models.

Anthropic’s AI Tool Sparks Sell-Off​

The latest sell-off was triggered by a blog post from AI startup Anthropic, which claimed that its AI tool, Claude Code, can understand and modernize COBOL, a programming language developed in the 1950s that continues to power critical global systems.

COBOL remains deeply embedded across banks, airlines, insurance firms, and government departments. It also plays a central role in IBM’s mainframe business, which has historically generated steady consulting and modernization revenue.

For decades, updating COBOL-based systems has been slow, costly, and reliant on large teams of specialized consultants. This complexity has created a consistent revenue stream for IBM, as many organizations struggle to maintain or upgrade legacy systems that few engineers fully understand.

AI Could Reshape Legacy Modernization Economics​

Anthropic argues that AI fundamentally alters this dynamic. According to the company, there are hundreds of billions of lines of COBOL code still running in live systems globally, even as the pool of engineers proficient in the language continues to shrink.

The startup estimates that around 95 per cent of ATM transactions in the United States still rely on COBOL, underscoring its deep integration within financial infrastructure.

Anthropic said its AI tool can scan extensive codebases, trace interdependencies across systems, generate structured documentation for poorly understood legacy environments, and identify potential risks that would otherwise take months to detect manually.

In its post, the company stated that modernization efforts have remained stalled because understanding old code often costs more than rewriting it. It added that AI changes that equation by making legacy code analysis significantly more efficient.

Investor Concerns Mount Over IBM’s Core Business​

The claims have raised fresh questions about the durability of IBM’s traditional mainframe and consulting revenue tied to COBOL system maintenance and modernization.

As AI tools advance in analyzing and upgrading legacy infrastructure, investors appear to be pricing in the possibility that automation could reduce demand for the labor-intensive services that have long supported IBM’s enterprise business model.

The market reaction highlights growing sensitivity to how rapidly AI innovations may disrupt established technology revenue streams, particularly in areas once considered stable and defensible.