IBM stock falls after Anthropic says AI can now modernize old software

Fast Company Tech

by Mark Sullivan

February 24, 2026

AI-Generated Deep Dive Summary

IBM’s stock fell by 10% on Monday after Anthropic announced its Claude Code tool can modernize COBOL software. COBOL, an outdated programming language used in critical systems like government transactions and banking, often runs on IBM mainframes. Modernizing this code is typically slow, expensive, and complicated due to poor documentation and a shrinking pool of skilled programmers. Anthropic’s AI-powered tool aims to speed up the process by analyzing and restructuring COBOL code, potentially allowing companies to modernize systems in quarters rather than years. COBOL was developed 67 years ago for business applications but is now poorly suited for modern cloud-based systems. While private-sector companies have moved away from it, the U.S. government still relies heavily on COBOL-based mainframes for financial transactions like tax payments and Social Security benefits. IBM generates significant revenue from servicing these systems, but if COBOL code were converted to modern languages, systems could shift to newer cloud servers, reducing IBM’s share of the market. The announcement comes amid broader investor concerns about AI deployment speed and global tariff uncertainties affecting tech supply chains. Additionally, Anthropic is in a separate dispute with the government over AI model restrictions for Pentagon use. For now, Anthropic’s models remain the only ones approved for classified government applications. This development highlights the growing impact of AI tools on legacy systems and the challenges of modernizing critical infrastructure. For those interested in design and technology, this story underscores the importance of adapting legacy systems to meet modern demands. The potential shift from IBM mainframes to cloud-based solutions could reshape enterprise software architecture and scalability. As AI tools like Claude Code become more sophisticated, they may accelerate the retirement of outdated technologies, forcing industries to rethink their digital infrastructure. This trend not only impacts tech companies but also has far-reaching implications for government services, finance, and other sectors reliant on COBOL systems.

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Originally published on Fast Company Tech on 2/24/2026