Why Gartner (IT) Is Down 5.1% After Profitability Miss and AI Competition Challenge

• Gartner recently announced updated 2025 guidance, projecting at least US$6.48 billion in consolidated revenue as well as increases to both Insights and Conferences segment growth expectations, while maintaining its Consulting and Other revenue forecasts.
• A sharp decline in profitability, significant goodwill impairment of US$150 million, and rising competition from AI-powered rivals have become key pressure points for the company's operations and outlook.
• We'll review how these profitability concerns and competitive pressures impact Gartner's investment narrative and future growth prospects.

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Gartner Investment Narrative Recap

To be a Gartner shareholder today, you need confidence in the company's ability to adapt as enterprise digital transformation fuels demand for trusted research and advisory services. However, the recent guidance update confirms near-term revenue growth, but ongoing profitability pressures and the competitive impact of AI-powered rivals represent the most important short-term catalyst and the primary risk, respectively, neither appears to be materially reduced by current developments.

One relevant announcement is Gartner’s record share repurchase of nearly 4 million shares (about 5 percent of outstanding stock) for over US$1 billion in Q3. While this could support shareholder returns, its impact on the profitability and competitive risks facing Gartner remains limited for now.

Yet despite these reassuring capital returns, investors should also be paying close attention to rising contract cancellations and churn among segments most affected by new technology entrants...

Read the full narrative on Gartner (it's free!)

Gartner's outlook forecasts $7.4 billion in revenue and $821.8 million in earnings by 2028. This reflects a 4.7% annual revenue growth rate but a decrease of $478 million in earnings from the current $1.3 billion.

Uncover how Gartner's forecasts yield a $285.45 fair value, a 20% upside to its current price.

Exploring Other Perspectives

Fair value estimates from the Simply Wall St Community range narrowly from US$284.56 to US$285.45 based on just 2 individual analyses. With intensifying competition from AI-driven upstarts, explore how other retail investors interpret Gartner's future potential and risks before making decisions.

Explore 2 other fair value estimates on Gartner - why the stock might be worth just $284.56!

Build Your Own Gartner Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Gartner research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Gartner research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Gartner's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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