International Business Machines (NYSE:IBM) experienced a sharp share-price decline on Monday, tumbling 13% - its largest one-day drop in over 25 years - as market participants reacted to mounting concerns about competitive pressure from Anthropic’s Claude Code tool. The tool’s potential to automate or accelerate modernization of COBOL-based legacy systems - an area connected to IBM’s longstanding franchise - was cited by investors as a catalyst for the selloff.
Despite the abrupt market move, Wedbush analysts signaled that the rout may be excessive. Dan Ives, the firm’s lead analyst on the stock, reiterated an Outperform rating and kept a $340 price target on IBM, saying the market’s response reflected a ‘‘sell first, ask questions later’’ approach to the perceived competitive risk posed by Claude Code.
Ives argued that fears the arrival of AI-driven code modernization tools will hollow out IBM’s COBOL-related business miss key commercial realities. He emphasized IBM’s deep entrenchment in mission-critical environments and noted that even if AI speeds code translation or modernization, enterprises will still need structured migration, compliance validation, and systems integration - segments where IBM already has established relationships and monetization levers in services and infrastructure.
"Even if AI accelerates code translation or modernization, enterprises still require structured migration, compliance validation, and systems integration such areas where IBM already has deep relationships in monetizing services and infrastructure," Ives wrote.
The Wedbush analyst also underscored that IBM’s mainframe value proposition is not limited to the COBOL language. According to Ives, the platform supports multiple programming environments and is engineered to provide high performance and security at scale. He distilled the modernization challenge succinctly: it "does not revolve around coding language, it revolves around the platform applications run on."
Adding nuance to the competitive debate, Ives pointed to IBM’s strategic collaboration with Anthropic to integrate Claude into IBM’s software lineup, embedding built-in security, governance and cost controls. He suggested this partnership reduces the odds that AI will simply displace IBM’s installed base, and instead makes it more likely that AI adoption could spur modernization demand that benefits companies positioned to deliver migration and integration services.
Beyond the immediate controversy over competitive dynamics, Ives highlighted IBM’s longer-term initiatives in data and hybrid cloud as strengthening its moat. He noted the company’s efforts to expand data capabilities and to position itself to benefit from increasing global spending on AI infrastructure.
This combination of a pronounced market selloff and a positive analyst stance underpins Wedbush’s view that the current pullback presents a "great buying opportunity into 2026."