Shares in IBM experienced their largest single-day drop in over a quarter-century on Monday, falling by 13.2% after AI startup Anthropic unveiled its Claude Code tool. The tool claims to dramatically accelerate the modernization of COBOL, a critical programming language relied upon by major industries like banking, insurance, and government – all sectors heavily invested in IBM mainframe systems.
The Rise of AI-Powered COBOL Modernization
Anthropic’s Claude Code promises to automate the most time-consuming aspects of COBOL upgrades, which traditionally require armies of consultants and years of effort. The startup claims its AI can reduce modernization timelines from years to quarters, a claim that directly challenges IBM’s established role in maintaining these legacy systems. This efficiency jump is significant because COBOL powers essential infrastructure; updating it is costly, complex, and often unavoidable.
The broader market reacted negatively, as software stocks overall declined amid growing concerns about the disruptive potential of advanced AI tools. Cybersecurity firms like CrowdStrike and Datadog also saw their shares fall, reflecting investor anxiety about AI-driven automation in the security sector.
Pentagon Pressure on Anthropic
Adding to the pressure, the U.S. Department of Defense is reportedly engaged in tense negotiations with Anthropic CEO Dario Amodei. According to sources cited by Axios, Secretary Pete Hegseth has summoned Amodei for a meeting on Tuesday where the Pentagon will likely push for unrestricted access to Anthropic’s Claude AI for military applications.
The Pentagon wants AI tools like Claude to function on classified networks without the safeguards Anthropic currently imposes. This conflict highlights a growing tension between commercial AI developers and government demands for unrestricted access, particularly in national security contexts. Reports suggest that the Pentagon is prepared to sever ties with Anthropic if the company refuses to comply, indicating the urgency of the situation.
Implications and Future Outlook
IBM’s stock decline signals that investors are factoring in the potential for AI-driven disruption to its core business. COBOL modernization represents a multi-billion dollar service market where IBM has long held a dominant position. If Anthropic’s claims hold true, the company faces a credible threat to that revenue stream.
The Pentagon’s aggressive stance with Anthropic demonstrates that governments are increasingly willing to pressure AI companies to prioritize national security over commercial limitations. This trend could reshape the AI landscape, forcing developers to adapt to stricter regulatory demands or risk losing lucrative government contracts.
The situation remains fluid, with all parties declining to comment, but the pressure on Anthropic and IBM is clear: AI is not just changing software; it’s shifting power dynamics in the tech industry and national security.
