Gartner (IT) Shares Plunge 47.9% Amid AI Threats and Cost-Cutting Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 15 2026
0mins
Should l Buy IT?
Source: Fool
- Significant Stock Decline: Gartner's shares plummeted 47.9% in 2025, primarily due to investor concerns over government spending cuts and the threat of AI replacing consulting services, leading to a substantial decline in market confidence regarding future growth.
- Slowing Revenue Growth: The company's revenue grew only 2.7% last quarter, with sales contract values also increasing at a single-digit rate, indicating a lack of growth momentum as it faces competition from AI, which could impact future profitability.
- Increased Buyback Program: Despite these challenges, Gartner is ramping up cash investments in its repurchase program, reflecting management's confidence in the company's long-term value, although this may not alleviate short-term market concerns about its profitability.
- Investor Confidence Shaken: The rapid advancement of AI tools puts pressure on Gartner's contract renewals, leading to diminished investor confidence in its future earnings power, suggesting caution in investing in the stock until AI risks are confirmed to be unfounded.
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Analyst Views on IT
Wall Street analysts forecast IT stock price to rise
11 Analyst Rating
4 Buy
6 Hold
1 Sell
Moderate Buy
Current: 159.060
Low
150.00
Averages
190.70
High
240.00
Current: 159.060
Low
150.00
Averages
190.70
High
240.00
About IT
Gartner, Inc. delivers actionable, objective insight to executives and their teams. It operates through three segments: Research, Conferences and Consulting. The Research segment delivers independent, objective insight to leaders across an enterprise through subscription services that include on-demand access to published research content, data and benchmarks, and direct access to a network of research experts located around the globe. The Gartner Conferences segment is designed for information technology (IT) and business executives as well as decision-makers looking to adapt and evolve their organizations through disruption and uncertainty, navigate risks and prioritize investments. The Consulting segment serves chief information officers and other senior executives to optimize technology investments and drive business impact. The Company also provides solutions for a range of IT-related priorities, including IT cost optimization, digital transformation, and IT sourcing optimization.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Profitability Pressure on HP: Although HP's Personal Systems revenue rose 11% year-over-year in Q1 2026, the surge in memory costs is expected to push its PC operating margins below long-term targets, posing risks to profitability.
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- AI Boosting Demand for Observability Software: Datadog was ranked as a leader in AI for IT operations by Forrester Research, and as cloud adoption and AI proliferate, its market share in core observability is expected to continue growing, making it a top priority for many IT departments.
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- AI Investment Returns: The company has invested over $100 billion in data center infrastructure over the past year, particularly in Nvidia chips to support AI model operations, with AI product sales being a crucial way to demonstrate returns on this investment, expected to drive future profit growth.
- New Feature Release: Copilot Cowork will be introduced as a research preview, designed to handle multi-step tasks such as sending scheduled emails and preparing meeting documents, which is anticipated to further drive the adoption of Copilot and enhance user productivity.
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- Profit Forecast Shortfall: The company projects adjusted earnings of $12.30 per share for 2026, missing analyst expectations of $13.52 to $13.63, reflecting a decline in profitability that may erode shareholder trust in management.
- Stock Price Volatility: Following the earnings report, Gartner's stock plummeted by $42.24, or 20.87%, closing at $160.16 per share, a drastic drop that could trigger panic among investors and exacerbate market uncertainty.
- Legal Investigation Launched: Pomerantz LLP is investigating whether Gartner and its executives engaged in securities fraud or other unlawful business practices, which could expose the company to legal risks and further impact its market performance and shareholder interests.
See More
