Market mistakenly killed IBM (IBM.US)Jefferies Financial Group Inc.: The sharp drop ignored the crucial fact of "self-revolution".

On Monday this week, IBM (IBM.US) stock price plummeted sharply, mainly affected by the news that Anthropic's Claude Code product can translate COBOL language, causing market concerns about this tech giant's traditional business. However, investment firm Jefferies Financial Group Inc. pointed out that the massive sell-off that led to IBM's largest single-day drop in 26 years actually overlooked a key fact - IBM is actively undergoing self-reinvention. Analyst Brent Thill wrote in a report to clients, "We believe the market's concerns have overlooked a key point: IBM has been actively driving self-reinvention. Its Watsonx Code Assistant for Z product embeds generative AI directly into large mainframes to facilitate the refactoring of COBOL to Java, enabling applications to be modernized in a full system environment. It is worth emphasizing that the acceleration of IBM's software business is not dependent on large mainframes, but is benefiting from the overall momentum in the development of hybrid cloud, artificial intelligence, automation, and data fields." Thill maintains a "buy" rating on IBM with a target price of $370. He added that the Watsonx Code Assistant for Z, which has been in commercial use for over two years, refactors COBOL language to Java using generative AI, eliminating the burden of modernizing traditional large mainframes. This tool can not only interpret production code and modernize applications but also retain key operational logic. "Embedding these capabilities directly into the Z platform gives IBM a structural advantage over horizontal code assistants - the latter may be powerful, but lack native access to mainframe data, tools, and runtime environments. Modernizing large mainframes goes far beyond simple code conversion and document writing, it requires deep integration with runtime resilience, performance tuning, and change management, areas in which IBM is a core participant. From a broader perspective, IBM is strategically positioning itself in a multi-model, agentized tech ecosystem through collaborations with providers like Anthropic and OpenAI. These AI agents ultimately need to be deeply integrated with enterprise data and hybrid cloud architecture, where IBM has a differentiation advantage with its data layer, connectors, and platform integration capabilities." Thill also pointed out that the resilience of large mainframe businesses far exceeds the expectations of most investors. IBM previously revealed that its mainframe business continues to grow, with 70% of customers expanding related workloads. "Currently, about 73% of global transaction volume is still processed by large mainframes, supporting critical mission systems in various industries, demonstrating the platform's deep roots and irreplaceability."