Wedbush has left its Outperform rating and $340.00 price target on International Business Machines Corp. after the company’s stock tumbled sharply in a single session.
IBM shares fell 13% in the previous trading session to $230.36, the largest single-day decline the company has experienced in more than 25 years. The selloff followed an Anthropic press release asserting that its Claude Code tool can modernize legacy systems that rely on Common Business-Oriented Language, or COBOL, a capability that market participants viewed as a potential threat to a portion of IBM’s business.
Market indicators show the stock has moved into oversold territory, with the relative strength index suggesting extreme selling pressure. Year-to-date, the shares are down 24%.
COBOL remains a mainstay in transaction-heavy computing environments. The language is embedded in mainframe systems optimized for large-scale processing; the article notes that about 95% of ATM transactions in the United States still depend on COBOL. Wedbush characterized the market reaction as driven by worries that AI-powered automation could disrupt IBM’s older business units.
At the same time, Wedbush emphasized that IBM’s mainframe platform supports a range of programming languages beyond COBOL and continues to be entrenched in mission-critical enterprise environments. The firm pointed to IBM’s portfolio of services that address structured migration, compliance validation, and systems integration for organizations that operate legacy COBOL-based systems.
Importantly, IBM and Anthropic have a strategic partnership to integrate Anthropic’s Claude into IBM’s software lineup. Wedbush said the arrival of AI modernization tools is more likely to trigger a transformation cycle—where IBM helps customers modernize—than to simply bypass the company’s existing installed base.
InvestingPro analysis cited in the coverage indicates that, despite the recent selloff, IBM’s stock appears undervalued at current levels. The company pays a roughly 3% dividend yield and has increased its dividend for 30 consecutive years. The analysis referenced an array of subscriber resources, including ProTips and Pro Research Reports that cover investment metrics.
Other sell-side analysts have remained constructive. Evercore ISI reiterated an Outperform rating with a $345 price target. Jefferies reaffirmed a Buy rating and a $370 price target, calling attention to IBM’s watsonx Code Assistant for Z, which refactors COBOL into Java as a pathway to modernize legacy applications.
IBM has also disclosed a partnership with Deepgram to embed voice artificial intelligence into its watsonx Orchestrate solution, enabling users to interact with digital agents through natural speech. Deepgram was identified as IBM’s first voice partner for that offering.
Despite the market’s recent concern about AI-enabled COBOL modernization, several analysts defended the resilience of IBM’s mainframe business. Evercore ISI highlighted IBM’s integrated platform, including z/OS and Cybervault systems, noting those capabilities can handle very large volumes of encrypted transactions daily; the coverage referenced the platform’s ability to process 25 billion encrypted transactions each day.
Collectively, these analyst notes and partnership announcements underscore IBM’s continuing effort to evolve its technology stack and to provide tools and services aimed at modernizing legacy systems rather than abandoning them.
Summary
Wedbush reaffirmed an Outperform rating and $340 price target on IBM following a 13% one-day drop tied to Anthropic’s claim it can modernize COBOL systems. The selloff pushed IBM into oversold territory and left the stock down 24% year-to-date. Analysts note IBM’s entrenched mainframe presence, existing migration and compliance services, and strategic AI partnerships with Anthropic and Deepgram. Other brokerages including Evercore ISI and Jefferies have maintained positive ratings and elevated price targets.
Key points
- Wedbush maintained an Outperform rating and a $340.00 price target on IBM after a steep single-day share decline.
- Anthropic said its Claude Code tool can modernize COBOL-based legacy systems, prompting investor concern about disruptions to IBM’s mainframe-related revenues.
- Analysts point to IBM’s services for migration, compliance validation, systems integration, and strategic AI partnerships - including Anthropic and Deepgram - as factors that support the company’s modernization strategy.
Risks and uncertainties
- AI-enabled modernization tools could accelerate customer migration away from legacy codebases in ways that affect mainframe-related revenue streams; this impacts enterprise technology vendors and services providers.
- Market volatility following announcements about AI capabilities can produce sharp short-term share-price movements, creating valuation and timing uncertainties for equity investors.
- Investor interpretation of partnerships and product roadmaps may vary, leaving open the possibility of continued analyst disagreement over the pace and scale of IBM’s transition to AI-driven offerings.