What Happened?

Shares of research and advisory firm Gartner (NYSE: IT) fell 5.3% in the afternoon session after RBC Capital Markets initiated coverage of the research and advisory firm with a neutral rating, citing concerns over slowing growth and potential disruption from artificial intelligence. In its note, RBC set a price target of $263 and gave the stock a 'Sector Perform' rating, pointing to near-term pressure from weaker technology spending. The bank's analysts also highlighted that contract value growth has moderated and that investors are doubtful about Gartner's ability to reaccelerate growth to double-digit figures by 2027. Furthermore, RBC expressed concern that the rise of generative AI tools could disrupt Gartner's business model and that its seat-based license structure could face pressure as businesses potentially scale back.

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What Is The Market Telling Us

Gartner’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 6 days ago when the stock dropped 4.2% on the news that Wolfe Research initiated coverage on the stock with a neutral 'Peerperform' rating, citing several pressures on the business. The research firm noted that Gartner's shares are under pressure due to budget constraints and concerns about AI disintermediation. This sentiment follows the company's recent second-quarter report, where it met analyst estimates but revealed that its total contract value grew by a modest 4.9% year-over-year.

Gartner is down 51.9% since the beginning of the year, and at $232.25 per share, it is trading 57.9% below its 52-week high of $551.80 from November 2024. Investors who bought $1,000 worth of Gartner’s shares 5 years ago would now be looking at an investment worth $1,816.

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