Anthropic's new AI tool can write 67-year-old COBOL code, which sends 115-year-old IBM's stock tumbling by 13% — IBM stock has worst day in 26 years, down 25% MoM and counting

What do airlines, banks, and insurance companies have in common? Besides being an absolute pain to deal with, they all rely on COBOL and IBM mainframe computers as core infrastructure. The computing giant's stranglehold over those markets may finally begin to crack, though. Anthropic has announced COBOL-specific functionality for its Claude AI bot, and IBM's investors responded with a resounding 13% drop in stock prices.

Anthropic published its ideas in a blog post, and the company seems to know its target market quite well. There's a Code Modernization Playbook available for download, and existing YouTube videos letting Claude Code loose on a COBOL illustrate the concept. Mixing "COBOL," "AI bot," and "YouTube" in the same sentence is utterly anathema to common logic... and yet here we are.

For practical purposes, COBOL only runs on one type of system, supported by one set of people: IBM's mainframes and its engineers. That means the company has enjoyed multiple decades of telling clients how many zeros the gigantic bills will have tacked on for the next period. The unforgiving nature of that stranglehold means that any attempt at breaking it is most welcome by its existing customers, and a serious threat to IBM as a business.

If you've ever interacted with social security, public administration, healthcare, government, finance, insurance, automotive, retail, or airlines, you've touched a COBOL system at some point in your transaction, even if it was 30 layers deep. Similar to gravity, the language is invisible and yet affects every part of the modern world.

A cynical view of the situation would say that the systems running COBOL are meant to be 100% accurate 100% of the time, a notion that doesn't lend itself very well to the "probabilistically correct" that LLMs can offer. Even still, as I've attested myself, a good bot is a power multiplier in the hands of a competent developer, and can also lower the barrier of entry for young folks trying their hand at wrangling old systems.

The language harkens back to the 1960s, proposing itself as a human-readable language targeted at business transactions, using full decimal-point math as default, in contrast to the default floating-point math in other languages. True to its proposal, it revolutionized business computing, becoming entrenched across almost every sector of note, and was never truly replaced.

The situation doesn't just revolve around IBM's monopoly, though. Most well-versed COBOL programmers are retiring and dying, making their skills rarer and more expensive. The COBOL systems invariably run business-critical operations that cannot afford any downtime whatsoever, and are chock-full of proprietary data formats and business logic that is not documented, and understood only by a few greybeards — if at all.

If you're wondering why COBOL just wasn't up and replaced with something else, know that any rewrite attempt must (a) reverse-engineer miles-long business logic; (b) reverse-engineer the underlying data structures; (c) reimplement said logic and structures while being careful to always use fixed-point decimal math; and (d) execute a perfect transition with minimal to zero downtime.

Even when all those conditions can be true, COBOL systems are often so interconnected that it's unfeasible to replace just the one, as is the case with airlines. And heaven help you if you're in the financial sector, as you'll have to undergo extremely long-winded tests and audits, adding months to any deployment.

There's a well-known joke among programmers that almost certainly originated from COBOL: "When I wrote this code, only God and I understood what it does. Now... only God knows."

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