What Happened?
Shares of research and advisory firm Gartner (NYSE: IT) fell 4% in the afternoon session after a company survey showed that only 22% of organizations have successfully scaled artificial intelligence, dampening optimism for near-term service demand. According to the company's press release, a Gartner survey of 1,303 senior executives found that only 22% of organizations have successfully scaled AI across multiple business units or adopted an AI-first approach.
Despite the low success rate, 85% of leaders still plan to increase their AI investments in 2026, devoting an average of 12% of their functional budgets to the technology.
The findings raised investor concerns that slower-than-expected corporate scaling and limited visibility into AI return-on-investment will delay enterprise demand for Gartner's research and advisory services, according to TipRanks. The disconnect between heavy AI investment and broad enterprise adoption has put pressure on the firm's advisory growth rate as clients re-evaluate their tech spending.
After the initial drop, the shares shed some of the losses and rose to $187.96, down 3.8% from the previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Gartner? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Gartner’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock dropped 7.5% on the news that the company reported third-quarter 2025 financial results that revealed a significant plunge in profitability and cash flow, overshadowing an earnings beat. While the company's revenue of $1.52 billion was in line with Wall Street's expectations and its adjusted earnings per share (EPS) of $2.76 beat estimates by 13.7%, investors appeared to focus on signs of deteriorating business health.
The company's operating margin contracted sharply, falling to 5.7% from 16.6% in the same quarter last year, indicating that expenses grew much faster than revenue. Furthermore, cash generation weakened considerably, with the free cash flow margin dropping to 17.6% from 38.1% a year ago. These steep declines in key profitability metrics signaled underlying operational challenges, outweighing the positive headline numbers.
Gartner is down 20.7% since the beginning of the year, and at $187.96 per share, it is trading 28.8% below its 52-week high of $264.09 from September 2025. Investors who bought $1,000 worth of Gartner’s shares 5 years ago would now be looking at only $602.86.
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