Why International Business Machines (IBM) Is Down 8.9% After Claude Code Targets COBOL Mainframes And What's Next

• In late February 2026, International Business Machines faced intense scrutiny after Anthropic’s Claude Code AI tool was promoted as a way to automate and accelerate modernization of COBOL-based systems that often run on IBM mainframes, sparking questions about the resilience of IBM’s legacy infrastructure and consulting franchises.
• At the same time, IBM announced moves such as tripling US entry-level hiring for 2026, expanding its watsonx Orchestrate platform with Deepgram’s voice AI, and securing a US$112.00 million Defense Commissary Agency contract, underscoring how the company is trying to align its workforce and product stack with an AI-centric future even as investors reassess disruption risks.
• With IBM’s shares down about 8.9% over the past week, we’ll assess how Claude Code’s COBOL ambitions may reshape the existing investment narrative.

Outshine the giants: these 23 early-stage AI stocks could fund your retirement.

International Business Machines Investment Narrative Recap

To own IBM today, you need to believe its hybrid cloud, AI and mainframe franchises can keep generating resilient cash flows even as AI tools challenge legacy consulting work. Claude Code’s COBOL push has sharpened the near term risk around mainframe modernization profitability, while the key catalyst remains whether IBM can sustain watsonx and software growth that reassures investors its AI transition is on track.

The recent US$112.0 million Defense Commissary Agency contract is a useful counterpoint to the AI jitters. It highlights IBM’s continued ability to win multi year, mission critical modernization deals, even as questions swirl around how much AI will compress traditional services work. For investors, this type of federal win sits squarely in the catalyst bucket of proving that IBM’s hybrid cloud and AI focused model still resonates with large, complex clients.

Yet beneath the AI story, investors should not ignore the growing concern that IBM’s legacy revenues may erode faster than newer offerings can scale...

Read the full narrative on International Business Machines (it's free!)

International Business Machines' narrative projects $74.4 billion revenue and $10.5 billion earnings by 2028. This requires 5.1% yearly revenue growth and a $4.6 billion earnings increase from $5.9 billion today.

Uncover how International Business Machines' forecasts yield a $302.05 fair value, a 27% upside to its current price.

Exploring Other Perspectives

Some of the most optimistic analysts expected IBM’s revenue to reach about US$76.6 billion and earnings US$12.1 billion by 2028, which is far more upbeat than consensus and assumes legacy headwinds stay manageable even as Claude Code now puts fresh pressure on mainframe related services. This shows how widely views can differ and why you should weigh several scenarios before deciding how IBM fits your portfolio.

Explore 15 other fair value estimates on International Business Machines - why the stock might be worth 14% less than the current price!

Reach Your Own Conclusion

Don't just follow the ticker - dig into the data and build a conviction that's truly your own.

• A great starting point for your International Business Machines research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
• Our free International Business Machines research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate International Business Machines' overall financial health at a glance.

No Opportunity In International Business Machines?

Right now could be the best entry point. These picks are fresh from our daily scans. Don't delay:

• We've uncovered the 15 dividend fortresses yielding 5%+ that don't just survive market storms, but thrive in them.
• Uncover the next big thing with 30 elite penny stocks that balance risk and reward.
• Capitalize on the AI infrastructure supercycle with our selection of the 33 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com