Gartner Stock Down 49%. Learn Why, What CEO Can Do, And And Whether To Buy $IT

Core Viewpoint - Gartner's stock experienced a significant decline of 28% on August 5, 2025, resulting in a loss of half its market value since the start of the year, primarily due to disappointing revenue guidance despite beating revenue and growth expectations in its second quarter earnings report [2][3][8]. Financial Performance - Gartner reported second quarter 2025 revenue of $1.7 billion, reflecting a 5.7% increase and slightly exceeding Zacks Consensus Estimate [16]. - Adjusted earnings per share for Q2 were $3.53, up 9.6% and 4.4% above Zacks Consensus Estimate [16]. - The 2025 revenue forecast is $6.46 billion, which is $110 million below Zacks Consensus Estimate [16]. - Adjusted earnings per share guidance for 2025 is $11.75, which is 90 cents below Zacks Consensus Estimate [16]. Growth Challenges - The company significantly lowered its growth forecast for its core Insights business line, with contract value growth expectations dropping from 5.1% to 2.5%, which shocked investors and led to a downgrade by UBS [9][10]. - Management attributed the slowdown to macroeconomic pressures and client spending constraints, with clients reducing discretionary spending on IT research and advisory services [10][11]. - The rise of AI tools has led clients to develop in-house capabilities, reducing their reliance on Gartner's consulting and research services [11][12]. Management and Strategy Issues - During the investor conference call, Gartner's executives did not address competitive disadvantages or market share losses, which frustrated investors [4][12][13]. - The company's cultural barriers, including an elitist mentality and a high-pressure sales culture, may hinder its ability to adapt and implement necessary strategic changes [4][14][17]. - Gartner's management has been criticized for failing to provide a compelling vision for restoring growth in light of changing customer needs and competitive strategies [13][15]. Future Outlook - Wall Street analysts have set an average 12-month price target of $453.63 for Gartner, indicating an 86% upside potential [15]. - To revive growth, Gartner must shift its business model to promote client self-reliance, integrate AI into its services, and focus on specific areas of expertise rather than competing as a generalist [17].