TLDR
- International Business Machines (IBM) shares have plummeted 28.6% over less than four weeks, sliding from $312.95 down to $223.35
- Anthropic’s announcement about COBOL capabilities in Claude Code sparked the decline, stoking concerns about AI threatening IBM’s legacy operations
- Analyst Brent Thill at Jefferies upheld his Buy recommendation with a $370 target, viewing the decline as an entry point
- watsonx Code Assistant for Z from IBM has been commercially available since late 2023, already leveraging generative AI to translate COBOL into Java
- A fresh collaboration with Deepgram was unveiled by IBM, marking its inaugural voice AI integration within watsonx Orchestrate
Shares of International Business Machines have experienced significant turbulence recently. The stock has shed 28.6% in under four weeks, tumbling from $312.95 on February 2 down to $223.35, positioning it close to its 52-week bottom.
The most dramatic hit occurred with a 13% single-session plunge — marking the company’s steepest one-day loss in over two decades.
The trigger? A post from Anthropic. The artificial intelligence firm showcased COBOL capabilities within its Claude Code offering, emphasizing that hundreds of billions of COBOL code lines continue running across banking, aviation, and public sector systems.
International Business Machines Corporation, IBM
This development rattled the market. IBM has historically dominated COBOL-reliant infrastructure including transaction processing and banking systems. The concern: artificial intelligence might diminish the need for IBM’s traditional COBOL offerings.
The wider decline also mirrors a broader market rotation out of established technology names, with capital flowing toward quantum computing ventures and fixed-income instruments.
Jefferies Stands Firm
Not all observers are abandoning ship. Jefferies analyst Brent Thill countered the alarm, contending IBM is “already disrupting itself.”
Thill highlighted IBM’s watsonx Code Assistant for Z, commercially launched in Q4 2023. This solution employs generative AI to translate COBOL to Java, decipher production systems, and modernize aging applications.
His position is that this provides IBM with a competitive advantage over generic AI development platforms, which cannot natively access mainframe environments and contextual operational data.
Thill further observed that IBM is positioning for a “multi-model, agentic world” through alliances with Anthropic, OpenAI, and additional players — indicating the perceived competitive threats are simultaneously strategic collaborators.
He characterized the decline as a “near-term sentiment overhang on legacy services rather than an existential or structural risk” and reaffirmed his Buy stance with a $370 target price, suggesting 66% appreciation potential from present levels.
Eleven additional analysts echo his optimistic outlook. Five analysts assign a Hold recommendation and one rates it a Sell, resulting in a Moderate Buy consensus overall. The mean target price stands at $337.53, indicating approximately 51% upside over the coming year.
IBM Expands Voice AI Capabilities
On the identical day, IBM revealed a partnership with Deepgram, establishing it as IBM’s inaugural voice AI collaborator.
Deepgram’s speech recognition and synthesis technology will be integrated into IBM’s watsonx Orchestrate ecosystem, enabling users to communicate with AI agents through conversational speech.
The capability spans numerous languages and regional variations, including Arabic and Indian English dialects, and addresses applications in customer support, conversation analytics, and voice-enabled data capture across healthcare and financial services.
IBM’s price-to-earnings multiple currently registers at 20.3, and certain valuation models indicate the shares trade below intrinsic worth.
Looking at historical patterns, IBM has experienced just one similar decline of 30% or greater within a 30-day window since 2010. After that episode, shares achieved a maximum rebound of 42% over the subsequent twelve months.
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