Gartner Inc

Gartner, Inc. is a provider of syndicated research and technology insights that serves tens of thousands of enterprise clients worldwide. The shares fell 18.31% after the company reported contract value (CV) growth that came in just 0.5% below expectations. We attribute most of the CV slowdown to two temporary headwinds: cost-cutting within the U.S. public sector and more cautious spending by companies exposed to tariffs and uncertain macro conditions. We believe this perception meaningfully undervalues the long-term opportunity. Gartner possesses a vast and growing proprietary dataset generated through hundreds of thousands of interactions that, we believe, AI cannot replicate. Rather, AI should be an accelerant for Gartner, enabling the company to surface insights faster and deliver them in more impactful formats.

We continue to own Gartner given its large addressable market, significant competitive advantage, and robust free cash flow generation, which we expect management to deploy toward share repurchases at depressed valuations. Despite recent valuation declines driven by rising AI fears, we remain optimistic about Gartner's sustainable competitive advantages and attractive growth prospects. The market's current assessment does not reflect the company's fundamentals, and we believe that as these characteristics are recognized, Gartner's valuations will expand.

We expect continued acceleration in contract value for the remainder of 2026 and beyond as Gartner makes operational enhancements to its product and sales force, leverages improved public sector spending, and benefits from easier comparisons. Management has accelerated share repurchases as the stock’s valuation has declined and we expect this rate of repurchases to be sustained on a go forward basis.

Despite reporting a quarter of stabilizing growth, shares of IT advisory firm Gartner lagged in the broad sell-off in asset-light companies that are perceived to be disruptable by AI. This trend indicates a potential risk to Gartner's business model as investors are increasingly cautious about companies that may be adversely affected by advancements in artificial intelligence.

We sold our position in Gartner (IT) following a deterioration in fundamental factors and several quarters of disappointing operating results. We had previously believed that Gartner would benefit from AI adoption, as enterprises look to Gartner’s expertise in technology to help chart the right path forward. Instead, Gartner has seen demand for its services moderate as companies take time to reevaluate their existing technological roadmaps and contemplate whether AI can replace some of Gartner’s services. We believe it is prudent to move to the sidelines, as these external factors will likely remain challenges for the foreseeable future.

During the quarter we made the decision to exit our position in Gartner after another disappointing quarter and several interactions with management which led us to conclude that the company’s priorities and actions did not align with the strategic direction we had advocated for. Over the past year growth decelerated, which we ascribed largely to political and macroeconomic factors such as efforts by DOGE and tariff-related disruptions. However, the company has continued to miss targets for Contract Value since, and we have become increasingly concerned about market saturation.

We view Gartner as a net beneficiary of AI and are optimistic that benefits will begin to materialize this year. Despite a roughly 0.5% revenue shortfall leading to a 37.3% decline in stock price, we believe this was due to public sector cost cuts and not substitution from AI. The dramatic declines in stock prices of companies in AI-impacted industries have been largely driven by multiple compression rather than fundamental issues, and we think Gartner's business model remains robust and well-positioned for future growth.

Gartner, Inc. has underperformed as investors rotated out of stocks perceived as at risk of being disrupted by AI. Despite the company's strong fundamentals, the market's fears regarding AI's impact have led to significant stock price declines. We believe this characterization is misplaced, but the current market sentiment has negatively affected Gartner's valuation. The stock's performance has been driven by multiple compression rather than fundamental issues, and we are cautious about its near-term prospects.

Gartner shares were down following another quarter of disappointing subscription revenue growth. The results added fuel to investor concerns of potential disruption risk from AI. While likely not totally immune, the company has made several enhancements to the core product and analyst team which we believe will be reflected in results steadily improving in the coming year.

Gartner shares were down following another quarter of disappointing subscription revenue growth. The results added fuel to investor concern regarding potential disruption risk from AI. While likely not totally immune, the company has made several enhancements to the core product and analyst team which we believe will be reflected in improved results in the coming year.