IBM’s share price slumped by 13 percent on Monday, seemingly caused by investors reacting to an Anthropic blog post that points out its Claude Code tools can accelerate refactoring of apps written in the ancient COBOL language.
Anthropic’s post points out that COBOL applications remain prevalent and often handle critical applications for governments, airlines, and financial institutions. The AI upstart also noted that COBOL-proficient programmers are hard to find, that attempts to train more of them have not grown the population, and that migrating from COBOL is therefore risky and expensive.
And then, because vibe coding tool Claude Code is Anthropic’s hammer and any software development problem looks like a nail, the company suggested using AI to help rewrite COBOL apps.
“AI can assess which components are safe to move and which need careful handling,” Anthropic suggests. “Areas with accumulated technical debt get documented before they become migration surprises.”
At first glance, the post portends trouble for IBM’s mainframe business.
But Anthropic’s post comes about three years after IBM itself suggested using AI to rewrite COBOL as Java and created a product called “watsonx Code Assistant for Z” to do it.
Indeed, the perils and opportunities presented by COBOL migrations, and the potential for AI to accelerate refactoring of legacy apps, are not new to the technical community. Just last week, Infosys chairman Nandan Nilekani said the rise of AI means the cost of rewriting legacy apps has become affordable and made such moves imperative.
In recent years, we’ve also reported mainframe migration initiatives from AWS, Microsoft and IBM spin-out Kyndryl, and NTT.
All that activity didn’t dent IBM’s mainframe business: Last month, Big Blue reported its highest mainframe revenue for 20 years, and CEO Arvind Krishna attributed that in part to the same AI code conversion tools Big Blue spruiked in 2023. Krishna also said mainframes still offer the lowest operating cost for some workloads.
Still, COBOL remains a drag on many organizations: The UK government last year bemoaned the big bills it pays to keep creaky COBOL code from crashing.
IBM’s share price dive came amid speculation that AI will ruin SaaS companies’ business models, an idea that is thought to be behind substantial share price decreases for the likes of Salesforce, Atlassian, Adobe, ServiceNow, and HubSpot.
So thanks, Anthropic, for your contribution to the long tradition of COBOL FUD, because if nothing else your post has shown AI has the power to wake people up to old and well-known risks associated with legacy tech. ®
