Why Gartner Stock Was Cut In Half In 2025

Core Viewpoint - Gartner's stock experienced a significant decline of 47.9% in 2025 due to concerns over government spending cuts and the potential impact of artificial intelligence on its consultancy services [1]. Group 1: Economic Themes - The economic landscape in 2025 was influenced by two main themes: the rise of AI and uncertainty surrounding government spending [3]. - Cost-cutting measures initiated at the beginning of the Trump administration resulted in a decrease in renewals for Gartner's services, which negatively affected investor sentiment [3]. Group 2: Impact of AI on Business - The increasing use of AI in advisory and consultancy services has contributed to a slowdown in growth for Gartner's corporate consultancy business [4]. - IT departments are being instructed to reduce spending to allocate funds for AI projects, leading to a preference for AI research tools over human consultants, which threatens Gartner's core business [4]. Group 3: Financial Performance - Gartner's revenue growth was limited to just 2.7% in the last quarter, with sales contract values also increasing at a single-digit rate, indicating a slowdown in growth [5]. - The company's profit margin has started to decline, raising concerns among investors about the sustainability of its earnings [5]. Group 4: Investment Considerations - Following the stock's decline, Gartner is trading at a forward price-to-earnings ratio of 17, which is considered attractive compared to the S&P 500 average [7]. - While some investors may view the current stock price as a buying opportunity, the potential risks posed by AI advancements should not be overlooked [8].