IBM stock plummeting became one of the biggest market stories on February 23, 2026, after a sharp selloff erased a large chunk of the company’s recent gains. Based on market data, IBM closed at $223.35, down $33.805 from the prior close (an implied decline of about 13.15% when calculated from the quoted price change), with intraday trading ranging from $221.00 to $255.77 and volume near 19.4 million shares.
The immediate catalyst appears to be a new Anthropic push into COBOL modernization, which markets interpreted as a direct threat to a revenue area associated with legacy modernization consulting and related enterprise services. Multiple market reports tied IBM’s drop to that announcement and also noted similar pressure on consulting names with legacy modernization exposure.
This article breaks down what happened, why IBM was hit so hard, what may be overreaction versus real risk, and what to monitor next if you’re following IBM stock.
Why IBM Stock Is Plummeting on February 23, 2026
The core trigger was Anthropic’s announcement and messaging around AI-assisted COBOL modernization, published on February 23. In its blog post, Anthropic argued that AI can reduce the cost and time required to modernize legacy COBOL systems, and described capabilities such as dependency mapping, workflow documentation, and risk identification that traditionally required large consulting efforts. Anthropic also promoted a related “Code Modernization Playbook.”
That matters because COBOL-heavy systems remain embedded in finance, airlines, and government, and Anthropic’s post explicitly framed modernization as an area historically constrained by cost, complexity, and scarce talent. Anthropic’s write-up repeatedly positions AI as a way to compress timelines and reduce the need for large manual discovery efforts in legacy transformation projects.
Investing.com’s report on the selloff said IBM shares dropped sharply after the announcement and noted that IBM, Accenture, and Cognizant were all under pressure, highlighting their legacy modernization practices and the market’s concern that AI tools could compress a service category that has historically generated revenue for consulting firms.
In plain terms: the market saw an AI tool targeting a known enterprise pain point and quickly priced in the possibility that some high-value, people-intensive modernization work could become faster, cheaper, and more automated.
What Anthropic Actually Announced and Why It Spooked the Market
Anthropic’s COBOL modernization post did not claim to instantly replace enterprise transformation teams end-to-end. It described a workflow where AI helps with exploration, mapping, documentation, risk analysis, and staged modernization, with human oversight still required for planning, validation, and business decisions.
But the market reaction shows that investors are focusing on a different question:
If AI reduces the labor intensity of legacy modernization, what happens to margins and pricing power for incumbents?
Anthropic’s language was especially market-moving because it emphasized that COBOL modernization once required “armies of consultants” and suggested AI can shift projects from “years” to “quarters.” Even if that framing is partly promotional, it directly targets a cost structure that investors associate with traditional consulting economics.
This is the kind of narrative shock that can hit a stock hard in a single session. Traders do not wait for multi-quarter proof when they believe the addressable economics of a segment may be changing.
Why IBM Was Hit Especially Hard
IBM is not just a generic “AI stock” or “old tech stock.” It sits at the intersection of several businesses the market now views as vulnerable to AI-driven repricing in enterprise software and services.
IBM’s latest quarterly results show three major segments with meaningful relevance here:
- Software revenue of $9.0 billion (up 14%)
- Consulting revenue of $5.3 billion (up 3%)
- Infrastructure revenue of $5.1 billion (up 21%), including IBM Z up 67% in the quarter
That mix helps explain the reaction.
IBM’s consulting operations are tied to large enterprise transformation work. Its infrastructure segment includes businesses connected to mission-critical enterprise systems. And IBM has long-standing relationships in regulated industries where legacy systems and modernization projects are central. IBM’s own materials emphasize its role across enterprise software, hybrid cloud, regulated industries, and critical infrastructure.
So when a high-profile AI company publicly showcases a faster path to modernizing COBOL-heavy estates, IBM becomes an obvious target for headline-driven repricing — even if the real revenue impact, if any, would take time to show up.
The Market Was Already Primed for a Selloff in Software and Services
IBM’s plunge did not happen in a vacuum.
Reuters has reported throughout February that investors were increasingly worried that fast-moving AI tools could disrupt traditional software and professional-services business models. Reuters also described a broad selloff in software/services names, with investors reassessing valuations and the durability of earnings assumptions in an environment where AI may compress labor-based or seat-based economics.
On February 9, Reuters noted the software and services industry had sharply underperformed the S&P 500 and said the selloff had raised concerns that the AI trade was reshaping markets in unexpected ways. Reuters also highlighted expectations for continued volatility and investor concern that core software business models could be disrupted.
Reuters separately reported broader pressure on mega-cap tech valuations in mid-February as investors questioned whether AI spending would produce returns sufficient to justify valuations. That broader risk-off backdrop can intensify moves in names exposed to AI narrative shifts.
In other words, IBM stock plummeting was a company-specific event inside a sector-wide stress regime.
IBM’s Fundamentals Before the Drop Were Not Weak
One reason this move feels dramatic is that it came not long after a strong-looking earnings update.
Reuters reported on January 28 that IBM beat Wall Street estimates for fourth-quarter revenue and profit, with strength tied to demand for software and AI-related services. Reuters said IBM reported $19.69 billion in quarterly revenue and adjusted EPS of $4.52, both above analyst expectations cited by LSEG. IBM shares rose nearly 9% in extended trading after that report, according to Reuters.
IBM’s own release also presented a strong Q4 narrative, including double-digit software growth and robust infrastructure performance, plus a generative AI “book of business” that IBM said had grown to more than $12.5 billion. IBM also said it entered 2026 expecting more than 5% constant-currency revenue growth and about $1 billion more year-over-year free cash flow.
So this was not a classic “bad earnings” collapse.
It was closer to a multiple compression / narrative reset move, where investors suddenly reprice future assumptions because a new technology appears to threaten part of the profit pool.
The Irony: IBM and Anthropic Were Partners Before This Selloff
Another reason the story is complicated is that IBM and Anthropic are not strangers.
IBM announced a strategic partnership with Anthropic in October 2025 to integrate Claude into select IBM software products and development tools, including an AI-first IDE for enterprise software development and modernization use cases. IBM said early internal testing involved more than 6,000 users and reported average productivity gains of 45% in that context.
That matters because it undercuts the simplest version of the “IBM loses / Anthropic wins” narrative.
The reality may be more nuanced:
- Anthropic can be a competitor to parts of legacy service economics
- Anthropic can also be an enabler inside enterprise software workflows IBM sells
- IBM may face pricing pressure in some services while benefiting from AI adoption in software, infrastructure, and managed enterprise implementations
Markets often price the threat first and sort out the nuance later.
Is the Selloff Rational, Overdone, or Both
A sharp one-day decline can be rational and still overshoot fundamentals in the short term.
Why the move may be rational:
- AI tools are improving quickly
Anthropic’s own examples and Reuters’ February reporting show investors are now treating AI disruption risk as a cross-sector issue, not just a niche software story. - IBM has visible exposure to modernization economics
IBM’s segment mix and enterprise positioning make it a natural proxy for legacy modernization and mission-critical transformation discussions. - Valuations have become more narrative-sensitive in 2026
Reuters’ February coverage repeatedly describes investors reassessing how AI could change future cash flows and industry structures, which amplifies stock reactions to new AI launches.
Why the move may be at least partly overdone:
- Enterprise modernization is not just code translation
Governance, testing, compliance, change management, integration, vendor coordination, and production risk still matter — especially in regulated sectors. Anthropic’s own post acknowledges human oversight and staged validation remain necessary. - IBM can adopt the same tools
IBM is not locked out of the AI ecosystem. Its Anthropic partnership and broader AI positioning suggest it can incorporate AI into delivery, potentially shifting economics rather than simply losing work. - IBM’s business mix is diversified
Software, consulting, and infrastructure all contribute materially, and IBM’s Q4 results show strength beyond any single modernization workflow.
The key issue for investors is not whether AI will affect IBM. It almost certainly will. The real question is whether AI becomes margin compression, a productivity tailwind, or a bit of both.
What “IBM Stock Plummeting” Means for Long-Term Investors
When a blue-chip enterprise tech company drops this much in a day, it usually triggers two competing reactions:
- “This is a structural break”
- “This is a panic-driven buying opportunity”
Both camps need evidence.
For long-term investors, the most useful framework is to separate the story into time horizons.
Short-Term (days to weeks)
The stock can remain volatile as traders react to headlines, analyst notes, and sector positioning. In this phase, price action is often driven more by sentiment and flows than by revised financial models. Reuters’ coverage of software-sector volatility and options market caution supports that backdrop.
Medium-Term (1–3 quarters)
This is where the thesis starts getting tested. Investors will look for evidence in:
- Consulting signings and backlog quality
- Pricing pressure in modernization-related work
- Whether AI-enabled delivery improves IBM margins/productivity
- Software growth durability
- Infrastructure demand trends, especially IBM Z-related cycles
Long-Term (multi-year)
The long-term outcome depends on whether IBM can remain a trusted orchestrator of enterprise AI transformation rather than just a seller of human-intensive services. IBM’s own strategy messaging emphasizes governance, regulated-industry expertise, and integration into existing enterprise infrastructure — areas where large organizations still need execution depth.
What Investors Should Watch Next in IBM Earnings and Guidance
If you are tracking IBM stock after this plunge, here are the most important signals to watch in future updates.
1) Consulting commentary on modernization demand
Listen for changes in language around:
- legacy modernization pipelines
- duration of projects
- pricing
- client demand for AI-assisted delivery
- margin impact from automation
If IBM frames AI as a way to deliver projects faster while protecting margins, that could calm the market. If management emphasizes competitive pricing pressure or delayed project starts, the selloff thesis may strengthen.
2) Software growth and attach rates
IBM’s software segment was the strongest part of Q4, and it remains central to the bull case. Investors will want proof that IBM can capture AI-driven spending even if services economics evolve. Reuters and IBM’s Q4 disclosures both point to software strength as a major support for the recent earnings beat.
3) Infrastructure and IBM Z demand normalization
IBM’s Q4 infrastructure growth was strong, with IBM Z up 67% year over year in the quarter. Investors need to understand how much of that is cyclical, how durable the momentum is, and whether concerns about modernization automation materially affect infrastructure-linked services demand.
4) AI monetization disclosure quality
IBM highlighted a generative AI book of business above $12.5 billion in its release, while Reuters reported IBM would stop reporting that metric from Q1. If the company provides fewer headline AI metrics going forward, investors may demand more granular proof of revenue conversion and margin contribution.
5) IBM’s positioning toward partners like Anthropic
Because IBM and Anthropic already have a partnership, management commentary on how IBM uses third-party AI models inside its products could matter a lot. Investors will be looking for signs that IBM can benefit from the same innovation cycle that spooked the stock.
A Practical Interpretation of the Selloff
The simplest takeaway is not “IBM is broken.”
A better interpretation is:
The market abruptly repriced IBM because AI is now being viewed as a direct disruptor of enterprise service economics, not just a demand tailwind for software.
That distinction matters.
For much of the AI rally, investors rewarded companies that could say “AI boosts demand.” But February’s market action shows investors are now asking the harder question: who loses pricing power when AI gets better? Reuters’ reporting on the broader software/services reset strongly supports that shift in investor psychology.
IBM got caught in that second phase of the AI trade.
SEO FAQ: IBM Stock Plummeting
Why is IBM stock plummeting right now?
IBM stock fell sharply on February 23, 2026 after investors reacted to Anthropic’s AI-focused COBOL modernization announcement, which the market interpreted as a potential threat to legacy modernization consulting economics. Broader software-sector AI disruption fears also contributed to the move.
How much did IBM stock fall?
Based on quoted market data, IBM traded at $223.35 with a -$33.805 move from the previous close, which implies roughly a 13.15% decline. The session range was $221.00 to $255.77.
Is IBM’s business in trouble?
The selloff does not automatically mean IBM’s overall business is in immediate trouble. IBM recently reported Q4 revenue and profit beats, strong software growth, and solid infrastructure performance. The current issue is more about how investors are reassessing future growth and margins under faster AI-driven automation.
Could IBM benefit from AI even if AI hurts some services work?
Yes, potentially. IBM already has an Anthropic partnership and has been integrating Claude into enterprise development tools. That means IBM could face pressure in some labor-intensive workflows while also gaining productivity and product advantages in software and enterprise AI deployment.
Final Takeaway on IBM Stock Plummeting
IBM stock plummeting on February 23, 2026 looks like a major AI-disruption repricing event, not a simple earnings disappointment. The selloff was tied to a specific catalyst (Anthropic’s COBOL modernization push), but it was amplified by a broader February market environment in which investors were already reassessing software and services valuations under rapid AI progress.
The next phase will depend less on headlines and more on execution:
- Can IBM defend pricing in modernization-related services?
- Can it use AI to improve delivery margins?
- Can software and infrastructure momentum stay strong?
- Can management provide clearer proof of AI monetization quality?
That is the real story behind IBM stock plummeting — and it will likely take several quarters, not several hours, to resolve.
