Shares of International Business Machines (IBM) suffered their steepest single-day decline in over 25 years on Monday, February 23, 2026, plunging 13.2% to close below $224 after opening above $254. This dramatic sell-off erased tens of billions in market value and marked the stock's worst monthly performance since 1968, with a slump of approximately 27% since early February.
The primary catalyst for the historic drop was a blog post from artificial intelligence startup Anthropic, which announced new capabilities for its Claude Code platform. The tool specializes in automating the modernization of legacy COBOL code—a programming language developed over six decades ago that remains deeply embedded in critical banking, insurance, and government infrastructure. IBM is a central player in this ecosystem, with a significant portion of its business reliant on mainframes that handle these COBOL-based transactions.
Anthropic argued that AI could upend the economics of system upgrades, stating, "Modernizing a COBOL system once required armies of consultants spending years mapping workflows." The company claimed tools like Claude Code could automate much of this process, allowing teams to modernize codebases "in quarters rather than years." This directly threatens IBM's lucrative service revenue derived from complex, expensive legacy system consultations.
Despite the panic, the stock recovered slightly in after-hours trading, gaining about 1.18%. Several analysts moved to calm investor fears, arguing the sell-off was overdone. Jefferies maintained its "Buy" rating with a $370 price target, while investment research firm Trefis suggested the crash presented a "compelling entry point." Analysts highlighted that IBM has long been aware of AI-driven disruption and is actively preparing with its own Watsonx Code Assistant for Z. They noted that IBM's long-term growth is anchored in hybrid cloud and AI, not solely in legacy code maintenance.
Financially, IBM's fundamentals remain intact. Revenue grew 4.5% over the past 12 months to about $65 billion, with quarterly revenue up 9.1% year-over-year to $16 billion. The company holds roughly $15 billion in cash against $67 billion in debt. Trefis pointed out that IBM's current valuation metrics—a price-to-free-cash-flow ratio of 17.8 and price-to-sales ratio of 3.2—are below the S&P 500 averages, suggesting the market may have overreacted to the perceived threat from Anthropic.
