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    Gartner (IT): Reassessing Valuation After Cautious Guidance and Rising AI-Driven Contract Risks

    Simply Wall St·12/07/2025 07:15:53
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    Gartner (IT) is under pressure after issuing cautious guidance that highlighted a new risk: some clients are trimming contracts as they experiment with AI tools instead of Gartner’s traditional research services.

    See our latest analysis for Gartner.

    The cautious guidance has arrived after a tough stretch for investors, with a year to date share price return of around negative 52 percent and a one year total shareholder return of roughly negative 56 percent. This signals that sentiment and momentum have clearly cooled, even though Gartner’s longer term five year total shareholder return is still positive.

    If you are weighing how Gartner’s reset fits into the broader tech landscape, this could be a good moment to explore high growth tech and AI stocks as potential alternative growth ideas.

    With shares now trading at a double digit discount to analyst targets, despite still positive revenue and profit growth, has pessimism gone too far, or is the market simply resetting expectations and already pricing in weaker long term growth?

    Most Popular Narrative Narrative: 19.2% Undervalued

    Based on the most followed narrative, Gartner’s fair value estimate of about $284 sits comfortably above the recent $229.77 close, pointing to a meaningful upside gap.

    The rollout of AskGartner, a proprietary AI-powered tool, is expected to deepen client engagement, increase user efficiency, and make Gartner's vast research more accessible, which should boost client retention and subscription value over time, contributing to predictable recurring revenues and potentially supporting margin expansion.

    Read the complete narrative.

    Want to see what kind of growth and margin profile could still justify a richer earnings multiple than today, even as profits step down? The narrative leans on modest top line expansion, thinner margins, and a surprisingly punchy future valuation bar. Curious how those moving parts combine into a higher fair value than the market implies today? Dive in to unpack the full earnings and cash flow roadmap behind this call.

    Result: Fair Value of $284.27 (UNDERVALUED)

    Have a read of the narrative in full and understand what's behind the forecasts.

    However, this upside narrative could unravel if generative AI tools commoditize research, or if prolonged corporate belt tightening further compresses contract value and renewals.

    Find out about the key risks to this Gartner narrative.

    Build Your Own Gartner Narrative

    If you see Gartner’s story differently or prefer to dig into the numbers yourself, you can shape a fresh view in minutes: Do it your way.

    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.

    Ready for more investment ideas?

    Before you move on, put your research to work and quickly scan fresh opportunities that match your style, so you are not leaving smarter returns on the table.

    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.