New York, Feb 25, 2026, 12:28 EST — Regular session
- IBM shares rose in Wednesday trading after sharp swings tied to AI-related worries over legacy code work.
- UBS upgraded IBM to Neutral from Sell, keeping a $236 price target.
- Investors are weighing whether AI coding tools can pressure IBM’s mainframe-linked services and consulting demand.
International Business Machines Corp (IBM.N) shares were up about 4% at $238.74 by midday on Wednesday, extending a rebound after a bruising selloff earlier in the week. The stock has traded between $231.22 and $239.55 so far, and remains well below its 52-week high of $324.90. (Investing)
The bounce follows AI-driven jitters around COBOL, a decades-old programming language still used in many high-volume transaction systems. A blog post from AI start-up Anthropic stirred fears that automated code tools could eat into IBM’s mainframe and consulting work, pushing the stock down about 13% on Monday, Feb. 23 — its steepest one-day slide since October 2000. (CIO)
That matters because IBM’s Z mainframes — big computers that run core systems in banks, airlines and governments — still anchor recurring software and services revenue. If AI turns pieces of modernization into a cheaper, more standardized service, the pressure would show up fast in pricing and in the number of billable consulting hours.
Anthropic wrote on Feb. 23 that tools like Claude Code can automate the exploration and analysis work that typically consumes a large share of COBOL modernization projects. With AI, teams can modernize a COBOL codebase “in quarters instead of years,” it said. (Claude)
IBM pushed back. In a post on its newsroom site, software chief Rob Thomas wrote that “translating code is one thing” but “modernizing a platform is something else entirely,” arguing customers pay for platform resilience and security rather than the language itself. (IBM Newsroom)
Some analysts also argued the market move got ahead of itself. Evercore ISI analyst Amit Daryanani called the selloff “unwarranted,” and Jefferies analyst Brent Thill said modernization is rarely just code translation and still requires integration and change management. (MarketWatch)
UBS upgraded IBM to Neutral from Sell on Wednesday and kept its price target at $236, saying the risk-reward looked more balanced after the stock’s 22% slide so far this year. UBS also sketched a wide range of outcomes — $312 in a bull case and $134 in a bear case — if AI coding tools start to disrupt IBM’s software and infrastructure revenue, it wrote. (Investing.com Nigeria)
Separately, IBM said it secured a Defense Commissary Agency contract with a ceiling value of $112 million over five years to modernize electronic shelf labels at commissaries in the United States and overseas. “This award underscores our commitment to innovation and operational excellence,” said Susan Wedge, a managing partner in IBM’s U.S. federal market. (IBM Newsroom)
But the stock’s swing has not settled the bigger question: whether AI makes legacy-code migration cheaper in a way that expands the pie, or cheaper in a way that compresses services and consulting margins. If customers push for lower prices or shorten projects faster than spending grows, IBM’s services lines would take the hit first.
Next up, IBM is scheduled to appear at Morgan Stanley’s Technology, Media and Telecom conference on March 3, ahead of its first-quarter earnings announcement slated for April 22. Traders will be listening for any fresh color on mainframe demand and how AI code tools change the economics of modernization work. (Ibm)
