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IBM Shares Sink as AI Disruption Hits Wall Street
Artificial intelligence has spent the better part of the last two years lifting markets to historic highs. This week, it may have just done the opposite.
Shares of IBM dropped more than 13% on Monday, marking their steepest single-day decline in over 25 years after AI startup Anthropic announced that its Claude Code tool could dramatically accelerate the modernization of COBOL systems.
That announcement struck at the heart of IBM’s consulting and infrastructure business. COBOL, a programming language that dates back to the 1960s, still powers critical systems across banking, insurance, airlines, and government operations. Updating those systems has traditionally required years of labor from specialized consultants, creating a lucrative modernization pipeline for IBM and its peers.
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Anthropic claims AI can now do much of that foundational work in a fraction of the time, potentially shrinking projects that once took years into timelines measured in months.
The result was immediate market panic. IBM’s plunge wiped tens of billions of dollars from its market value and contributed to what could become its worst monthly performance in decades. For a company that had positioned itself as an enterprise AI leader through its Watsonx platform and reported more than $12 billion in generative AI-related business by the end of 2025, the sell-off signaled something deeper than a single-stock reaction.
It signaled a shift in what Wall Street fears AI might actually do.
AI Mayhem Spreads Across Tech & Crypto
IBM was not alone. Cybersecurity firms, including CrowdStrike and Datadog, also saw declines as investors weighed the implications of Anthropic’s expanding development tools, including security-focused applications capable of identifying and fixing vulnerabilities in software.
The concern is straightforward. If generative AI can autonomously rewrite legacy code, modernize enterprise software, and patch security gaps, entire service categories that have traditionally required armies of consultants may begin to shrink.
That fear is not limited to equities. Cryptocurrency markets also experienced declines in tandem with the broader tech sector as investors reassessed the long-term value of AI-linked business models across industries. Even IT stocks in global markets followed suit, with companies tied to software modernization falling sharply after IBM’s sell-off triggered a wider reassessment of legacy-technology service demand.
A Financial Panic or the Next Phase of AI?
The past 24 hours have introduced an uncomfortable paradox for investors and policymakers alike. Artificial intelligence has been marketed as a productivity engine capable of driving economic growth, streamlining workflows, and unlocking entirely new industries. But productivity gains often come from eliminating the need for existing labor or services.
IBM’s drop suggests markets may finally be confronting that reality. If AI can modernize COBOL, it could theoretically reduce the need for large portions of enterprise consulting. If it can audit software systems, it may eventually alter cybersecurity business models. If it can autonomously generate applications, some analysts argue it could challenge the foundations of software-as-a-service itself.
The question now is whether this represents a correction in AI hype or the beginning of a new stage in its economic dominance. For the past year, AI has largely been viewed as an additive force for corporate earnings. This week’s developments suggest it may also be a subtractive one.
Markets are now grappling with whether AI will primarily create new opportunities or dismantle existing ones faster than companies can adapt. Either way, the era of AI quietly boosting productivity behind the scenes may be over.
Wall Street is now being forced to confront what happens when the technology begins reshaping its own balance sheets.
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