International Business Machines (IBM) shares experienced their worst single-day decline in over 25 years on February 23, 2026, plummeting 13.15% to $223.35 after AI startup Anthropic announced its Claude Code tool could modernize COBOL systems—the legacy programming language that runs on IBM mainframes. The dramatic selloff wiped approximately $30 billion from IBM's market capitalization in just one afternoon, sending shockwaves through the tech sector. However, in a classic 'buy the dip' response, shares rebounded 5.25% the following day as analysts argued the threat was overblown and investors saw opportunity in the panic.
How a Single Blog Post Wiped $30 Billion Off IBM's Market Value
The trigger for IBM's historic crash came from an unexpected source: a blog post from AI company Anthropic. On February 23, 2026, Anthropic announced that its Claude Code tool could now automate the modernization of COBOL systems, a programming language that still powers critical infrastructure in banking, government, and healthcare—and runs predominantly on IBM mainframes. For decades, IBM has generated substantial revenue from maintaining and modernizing these legacy systems, often through lengthy consulting engagements.
Anthropic's announcement suggested that AI could dramatically reduce the time and cost of COBOL modernization, potentially undermining a core IBM revenue stream. "Modernizing a Cobol system once required armies of consultants spending years mapping workflows," Anthropic wrote in its blog post. "Tools like Claude Code can automate the exploration and analysis phases that consume most of the effort in Cobol modernization." Investors reacted swiftly, with IBM shares closing 13.15% lower at $223.35—their worst daily performance since October 2000.
From AI Threat to Market Panic: The 48-Hour Rollercoaster
The sequence of events unfolded with remarkable speed. On Monday, February 23, Anthropic published its blog post detailing Claude Code's new capabilities around 10 a.m. Eastern Time. Within hours, IBM stock began a steep descent, dropping more than 10% by midday. By market close, the stock had shed 13.15% of its value, wiping roughly $30 billion from IBM's market capitalization. The selloff accelerated in after-hours trading, with shares briefly touching $220.
Tuesday, February 24, brought a dramatic reversal. As analysts digested the news, many concluded the market reaction was excessive. Jefferies reiterated its 'Buy' rating on IBM with a $370 price target, arguing that IBM's future growth depends more on hybrid cloud, AI, and data than on legacy mainframe services. Retail sentiment on platforms like Stocktwits flipped from 'bearish' to 'extremely bullish' overnight. IBM shares opened 3% higher and surged as much as 5.5% during the session, closing at $235.07—a 5.25% gain that recovered nearly half of Monday's losses.
Why IBM's Crash Might Be a Buying Opportunity
Despite the panic, several fundamental factors suggest IBM's selloff may be overdone. First, COBOL-related services represent only a small portion of IBM's overall revenue—likely in the low single-digit percentages. The company's growth engines are now its software segment (which grew 12.4% in Q4 2025) and its generative AI business, which has surpassed $12.5 billion in bookings. IBM's recent acquisition of Confluent for $11 billion further strengthens its hybrid cloud and data streaming capabilities.
Second, IBM's financial health remains robust. The company reported Q4 2025 revenue of $19.7 billion, beating estimates by 2.5%, and generated $14.7 billion in free cash flow for the year. Management issued optimistic 2026 guidance, forecasting continued growth in software and consulting. As Jefferies analysts noted, "IBM's future growth in software doesn't depend mainly on mainframes. Instead, it depends on broader growth in hybrid cloud, AI, and data, which we believe remains strong."
Third, valuation metrics have become more attractive. After the selloff, IBM's price-to-earnings ratio fell to levels not seen in months, while its dividend yield approached 4%. For income-oriented investors, the combination of a high dividend and potential capital appreciation could present a compelling entry point.
Where IBM Stock Stands Now: Recovery and Resistance Levels
As of February 24, 2026, IBM shares trade at $235.07, down 19.42% year-to-date but up 5.25% from Monday's close. The stock remains 27% below its 52-week high of $324.90, reached in late 2025. Key technical levels to watch include the $240 resistance zone (the pre-crash support level) and the $220 support level (Monday's intraday low).
Market capitalization stands at approximately $208.8 billion, making IBM the 45th largest company in the S&P 500. The company's dividend yield of 3.9% is among the highest in the technology sector, providing downside cushion for long-term investors. Options activity suggests continued volatility, with put volumes spiking on Monday and call volumes rising sharply on Tuesday.
The Road Ahead for IBM: AI Transformation or Legacy Decline?
IBM's future will be determined by its ability to navigate the dual challenges of AI disruption and legacy modernization. The company has made significant investments in its Watsonx AI platform, which now boasts over $12.5 billion in bookings. Its hybrid cloud strategy, anchored by Red Hat, continues to gain traction among enterprises seeking to modernize infrastructure without abandoning existing systems.
However, the Anthropic threat highlights a broader risk: as AI tools become more capable, they could automate away not just COBOL modernization but other consulting and services revenue streams. IBM's response will likely involve accelerating its own AI offerings while leveraging its deep enterprise relationships to help clients navigate the transition.
Analysts are divided on the outlook. Some see the selloff as a buying opportunity, pointing to IBM's strong cash flow, attractive valuation, and growing AI business. Others warn that the COBOL threat could be the first of many AI-driven disruptions to IBM's legacy revenue streams. The coming quarters will be critical for assessing whether IBM can successfully pivot from legacy mainframes to AI-driven growth.
Key Points for Investors
1. Historic Crash: IBM shares fell 13.15% on February 23, 2026—their worst single-day drop since October 2000—after Anthropic announced AI tools for COBOL modernization.
2. Swift Recovery: Shares rebounded 5.25% the next day as analysts argued the threat was overblown and retail investors turned bullish.
3. Fundamental Strength: IBM's Q4 2025 results beat expectations, with AI bookings exceeding $12.5 billion and free cash flow of $14.7 billion.
4. Valuation Opportunity: The selloff has made IBM's dividend yield approach 4% and its P/E ratio more attractive relative to historical levels.
5. Long-Term Risk: AI disruption could threaten legacy revenue streams, but IBM's hybrid cloud and AI investments position it for future growth.
For investors, the key question is whether IBM's selloff represents a temporary market overreaction or a fundamental reassessment of its business model. Given the company's strong financials, growing AI business, and attractive valuation, many analysts see the dip as a buying opportunity—but caution that volatility may continue as the market digests the implications of AI disruption across the tech sector.
