UBS Upgrades IBM, Sees More Balanced Expectations Ahead

International Business Machines Corporation (NYSE:IBM) is included among the 13 Most Promising Long-Term Stocks to Buy According to Hedge Funds.

On February 24, UBS upgraded International Business Machines Corporation (NYSE:IBM) to Neutral from Sell and set a price target of $236. The upgrade reflects a more balanced view of the stock following recent volatility and changing expectations.

A CNBC report published on February 23 said IBM shares came under significant pressure that day. The stock fell about 13.2% to close at $223.35. The decline followed an announcement from Anthropic about its Claude Code AI tool, which can help modernize older systems built using COBOL. This development raised concerns among investors, as COBOL has long been closely associated with IBM’s mainframe business.

IBM has played a central role in supporting COBOL-based systems for decades. These systems continue to run critical operations, including banking transactions, payment processing, and retail infrastructure. Maintaining and modernizing these systems has traditionally required significant time and specialized expertise. Anthropic said its AI tool can automate much of the work involved in analyzing and updating COBOL code. This process has historically been complex and costly. COBOL, first introduced in the late 1950s, still supports essential infrastructure such as ATM networks, airline systems, and government operations.

The company noted that the number of programmers skilled in COBOL has declined over time. AI tools can now analyze large codebases more quickly, identify dependencies, document workflows, and highlight risks. Tasks that once took months can now be completed much faster. Anthropic also said modernization efforts were often delayed because updating legacy code was expensive and difficult. With AI simplifying that process, companies may have more flexibility in modernizing their systems. This could reduce reliance on traditional service providers over time.

These developments have added to broader investor concerns about AI’s potential impact on established technology companies. IBM is among the firms facing questions about how AI could reshape legacy software and IT services.

International Business Machines Corporation (NYSE:IBM) provides hybrid cloud, artificial intelligence, and consulting services. Its business operates through four main segments: Software, Consulting, Infrastructure, and Financing.

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