The Core Message of AI: Skate to Where the Puck is Going and Don't Get Fooled Again with IBM Under Assault

Stocks took a pretty serious bruising to open the week, largely on the notion that Anthropic's AI Claude Code tool could rapidly and efficiently modernize legacy software that relies as COBOL as its base language.

That sent shares of IBM down by 13% on the day, triggering another selloff on the Dow and dragging the other indices down with it. In just the past month, the Dow has dropped 1.23%, the S&P, 1.62, and the NASDAQ, 4.13%. Year-to-date, the picture is less gloomy, with the Dow still up by 1.23%, the S&P essentially flat (+0.23%) and only the NASDAQ in the red, down 2.64%.

The trend to the downside is becoming clearer. At the end of last year and into reporting of 4th quarter earnings by the tech giants, it was fear that CapEx for AI development had overshot any reasonable expectation of profitability. More recently, the concern is that AI will make certain business segments obsolete. Companies with a core business in software or programming have been under assault from AI development, which is advancing its coding skill set at an alarming rate. The majority of coders and programmers are already using AI to a large degree because it can generate a multitude of code in a fraction of the time a team of programmers can.

On the issue of COBOL, upon which most legacy banking, finance, and government agencies rely (95% of all ATM transactions for instance), veteran programmers are split over what advancements AI can make to the 60+ year-old language, the source of which is a proprietary property of IBM. While it's clear that some functions can be upgraded and modernized, there's a growing consensus that the core COBOL language that IBM controls will not soon be under assault. That does not rule out that COBOL will be less valuable in the future or that it will be eventually replaced by faster, more resilient modernized software applications.

As AI improves its functionality in code compilation, mathematics, decision-making, and integration into anything and everything digital, long-standing assumptions about the primacy of companies and systems rooted in post-World War II technology will be increasingly scrutinized, modernized, or replaced. Just as the advent of the automobile during the second industrial revolution replaced horse-drawn carriages, buggy whips and harness manufacturers, so too will the latest technology weed out those systems that have been overtaken by the information revolution that is taking place today.

From an investment perspective, the wisdom of hockey legend Wayne Gretzky, may be the most appropriate, conceptually: "Skate to where the puck is going."

As Tuesday's session comes into view, following the Dow's worst session in just over a month (January 16), futures are pointing at a dead cat that is being prepared to be thrown from a rooftop. For those not familiar with the term, "dead cat bounce", it refers to the snap-back reaction or buying of the dip that is typical after a large rundown. What will be telling from Tuesday's session and the remainder of the week is whether the major averages can maintain a positive slant in the face of the growing threat of AI, which could change the nature of business operations in many sectors.

On that matter, perhaps one should consider the warning from the Who (the band, not the World Health Organization): "Won't Get Fooled Again."

At the Close, Monday, February 23, 2026: Dow: 48,804.06, -821.91 (-1.66%) NASDAQ: 22,627.27, -258.79 (-1.13%) S&P 500: 6,837.75, -71.76 (-1.04%) NYSE Composite: 23,214.89, -237.71 (-1.01%)