INTERNATIONAL Business Machines (IBM), the giant US manufacturer of corporate computers suffered a massive drop in its share price on Monday as panic surrounding artificial intelligence (AI) caused panic in the stock market.
IBM, considered ancient by modern computing standards, supplies and maintains the vast network of mainframe computers that form the backbone of banks, airlines, bank card payments, government agencies and many more across the globe.
IBM became the latest of the giant US tech companies to suffer from the panic gripping capitalist investors over the AI bubble.
What hit IBM, and caused its share price to fall by 13% with the company losing $31 billion in a single day, was a blog published on Sunday by a AI research firm, Anthropic, about how its ‘Claude Code’ tool can be used to modernise computer software written in COBOL.
COBOL is the programming language developed in the 1960s that handles large scale batch transactions across critical industries. This archaic computer language is the backbone to the giant mainframe computers that dominate the world industries and governments.
The problem is that COBOL is rarely, if ever, taught to new generations of computer technicians forcing these industries to rely on IBM to provide the necessary expertise to maintain and upgrade their systems. This suits IBM very well, as its large multi-year consulting charges provide a massive chunk of the company’s profits.
In the last quarter, IBM made $5.3 billion, approximately a quarter of its income, from consultancy fees.
Now along has come Anthropic with the promise that its AI system can streamline, or partially automate, COBOL modernisation.
IBM was not alone in suffering sell-offs as fears of an AI bubble has shaken the stock market rigid with investors rushing to sell off shares in companies seen as at risk from the latest generation of AI.
Monday’s mass sell-off of some of the biggest tech companies in America was also sparked by a report by Citrini research, a small US research firm, which warned about the disruption caused by AI and the dangers it poses to white-collar workers and the global economy.
Citrini’s paper, headed ‘The 2028 Global Intelligence Crisis’ spread like wildfire online with its hypothetical scenario which explored the thesis that the AI explosion will continue to trigger mass job losses in the US, causing a significant collapse of consumer spending and collapsing the US economy.
The report claimed that US unemployment would hit 10% by 2028 and that the stock market would peak in October 2026 before collapsing.
The Citrini report insisted that the rapid drive by the giant US tech companies had led to a surge in ‘Ghost GDP’ that benefitted AI companies but not the wider economy, saying: ‘For every new role AI created, it rendered dozens obsolete.’
The fact that two short, and in one case hypothetical, reports could cause a meltdown in the share prices across a range of tech companies and industries is a clear sign of the extreme volatility and precarious nature of the capitalist stock markets.
The AI bubble has for some time been feared by the central banks for inflating the value of stocks in companies like META, Amazon and Tesla into the stratosphere, relying on vast amounts of debt to fuel their expansion. Now the investors have got the jitters and one spark results in a massive sell-off of shares once thought cast-iron.
While AI is undoubtedly a scientific advance, it cannot be allowed to remain in the hands of a rapacious capitalist class and multi-billionaire tech owners determined to exploit it for profit and certainly not for the benefit of humanity.
The powerful working class in the US, UK and Europe will never accept being driven into mass unemployment and starvation which is the only future capitalism holds for them.
The burning issue of the day is for the working class to seize power by overthrowing their capitalist governments replacing them with workers governments and socialism.
Only a socialist planned economy can utilise all the advances in science for the benefit of all humanity and not the profit of a tiny handful of capitalists.
