February proved to be a terrible month for software stocks. IBM lost over 18% on fears that Anthropic’s Claude AI could replace IBM’s Cobol coding moat. The good news is that investors did not buy the explanation that Anthropic caused the stock to fall. Short sellers held a small, 2.1% short float against IBM stock.
In reality, IBM’s selloff is due to its technical chart: the share price indicated a bearish double top pattern at $320. This formed between November 2025 and early February.
Chief Commercial Officer Rob Thomas wrote that AIs that translate COBOL code do not equate to modernizing enterprise systems. Instead, platform architecture is at the heart of mainframe value.
AIs that merely translate code do not capture COBOL’s complexity.
Beware of the AI Hype
AI executives who overpromise capabilities need to prove that their product works. The optimistic delivery will boost the market capitalization of both OpenAI and Anthropic. That will matter when they file their initial public offering. Afterward, well-established firms like IBM, Salesforce (CRM), ServiceNow (NOW), and Adobe Systems (ADBE) will grow sales steadily.
Profitability from software is unlikely to weaken amid the rise of AI. Corporations that cut jobs, replacing workers with AI, might not achieve coding efficiency and quality. They will fall behind the very software firms they intended to compete with.
