IBM Shares Plummet on AI's Cobol Modernization Threat

Anthropic PBC, an AI company focused on safety, has revised its Responsible Scaling Policy. The company will now only delay AI development if it risks being dangerous and it believes it lacks a significant competitive edge.

This policy adjustment reflects a shift in the environment towards prioritizing AI competitiveness and economic growth over safety-focused discussions at the federal level. Anthropic is actively competing with major players like OpenAI and Google in the rapidly evolving AI market.

Separately, International Business Machines Corp. (IBM) shares saw a dramatic decline of over 13% on Monday. This downturn followed Anthropic's announcement that its Claude Code tool can modernize Cobol, an older programming language that underpins many IBM mainframe systems.

The widespread fear that artificial intelligence will disrupt the growth prospects of legacy companies has led to significant selling pressure. A major software exchange-traded fund has fallen 27% this year, marking its worst quarterly drop since the 2008 financial crisis.

IBM defended its mainframe business, asserting that its platform provides consistent performance and security regardless of the programming language used, including Cobol, Java, or others. However, a substantial portion of IBM's revenue is still linked to its mainframe operations, which are critical for sectors requiring high reliability, such as finance and government.

Concerns are mounting that AI's ability to generate code could reduce demand for traditional software products, impacting companies' growth, profit margins, and pricing power. This has spurred a broad selloff in cybersecurity and software stocks.