Shares of Gartner (IT +0.15%) fell 47.9% in 2025, according to data from S&P Global Market Intelligence. The advisory consultant for IT departments for large organizations fell over fears of cost cuts on government spending, as well as risks that artificial intelligence (AI) will replace its services in the coming years. The company's revenue growth is slowing, while management is now plowing cash into its repurchase program.
Here's why Gartner stock fell last year, and whether it is a buy right now.
NYSE: IT
Key Data Points
Cost cuts for AI spending
Two major themes were at play economically in 2025: AI and the uncertainty around government spending. Gartner is facing a potential headwind from both. The cost-cutting measures to reduce government waste at the start of the Trump administration led to a decline in renewals for Gartner's services, which investors did not like.
More importantly, the use of AI for advisory and consultancy services has led to slowing growth for Gartner's corporate consultancy business. IT departments are being told by executives to lower spending in order to make room for AI projects, while also utilizing AI research tools instead of actual humans. This is attacking Gartner's bread and butter, advising the technology and executive divisions at large organizations.
Gartner's revenue was up just 2.7% last quarter, with sales contract values -- an indicator of future revenue growth -- growing at a single-digit rate as well. This is a slowdown in growth for Gartner, which investors fear is due to AI replacing its services for companies. At the same time, Gartner's profit margin has begun to slide.
Image source: Getty Images.
Time to buy Gartner stock?
After this drawdown, Gartner stock now trades at a cheap-looking forward price-to-earnings ratio (P/E) of 17, which is well below the S&P 500 market average.
If you think these AI fears are overblown, now could be a good time to hop on the Gartner bandwagon and buy the dip. Personally, I don't think these AI fears should be taken lightly. The capabilities for these AI tools, such as Claude Code, are getting better exponentially, and could eat into Gartner's contract renewals over the next decade. This could hurt Gartner's earnings power in the years to come.
Unless you are supremely confident that these AI risks are not going to come true, it is best to stay away from Gartner stock right now.
