IBM’s $31 Billion Ouch: COBOL & the AI Reckoning

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Right, so IBM. Let’s talk about a Monday that cost them roughly $31 billion. Not chump change, even for a legacy tech giant. Apparently, the market had a collective panic about AI—specifically, the possibility that clever algorithms might render decades of COBOL coding obsolete. COBOL. Honestly, it sounds like something you’d order at a particularly pretentious brunch. But it’s the bedrock of… well, a lot of things still. And the market doesn’t do uncertainty, does it?

Shares bounced back a little—2.7% as of this afternoon, which, let’s be real, is just trying to look busy. Year-to-date, they’re down about 22%. It’s a good reminder that even the biggest companies can have a bad hair day. Or, in this case, a bad algorithm day.

Investors Are Worried Anthropic and Other AI Leaders Could Disrupt IBM

Anthropic, the folks behind Claude (another name that sounds suspiciously like a Victorian villain), dropped a blog post suggesting AI could actually modernize COBOL systems. The implication being, of course, that IBM might be… lagging. They pointed out the dwindling number of COBOL engineers—apparently, universities aren’t exactly churning them out these days. Which, you know, makes sense. Why learn a language that feels like it belongs in a museum when you could be coding in Python and pretending to be a digital nomad?

IBM’s response was… predictable. They argued that translating the code is the easy part. The real challenge is redesigning the data architecture, maintaining transaction integrity, and dealing with all that lovely legacy hardware. Which, fine. It’s a fair point. It’s like saying you can replace the engine in a vintage Rolls-Royce, but good luck finding someone who understands the wiring. Still, it felt a bit defensive, didn’t it? Like a very expensive, very proud company trying to convince itself—and everyone else—that it’s still relevant.

Is IBM Stock a Buy After Its Big Pullback?

Look, mainframe sales still account for a hefty chunk of IBM’s revenue—about 23% last year, if you’re keeping score. And mainframe-related software adds another 29%. So, yeah, investors are understandably twitchy about anything that threatens that cash cow. It’s like realizing your grandmother’s antique furniture is suddenly out of style. You still love it, but you’re not entirely sure what to do with it.

The stock has taken a beating this year, but it’s still up 76% over the last three years. It’s currently trading at around 18.5 times this year’s earnings. They also pay a dividend—a respectable 2.9%—but growth is… modest. Let’s just say they’re not exactly disrupting anything. They’re more like… carefully preserving it.

Revenue hit $67.5 billion last year, up 8%—or 6% if you adjust for currency fluctuations. They’re projecting around 5% growth for the coming year. Free cash flow is expected to be around $15.7 billion—up 7%. Solid, reliable, utterly… predictable.

How much Claude Code and other AI tools will actually impact COBOL and IBM’s mainframe business is anyone’s guess. The market might be overreacting. IBM has a loyal customer base, a reputation for reliability, and its own AI initiatives. They might just weather this storm. Or, they might slowly fade into irrelevance, like a perfectly preserved dinosaur.

Honestly? With growth already looking sluggish compared to other tech giants, I think there are better places to put your money. It’s not that IBM is a bad company. It’s just… boring. And in this market, boring is a liability. I mean, let’s be real, who wants boring?

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2026-02-24 23:23