Gartner Shares Rise on Strong Earnings and AI-Powered Tools but Struggles with Sector Headwinds as Volume Slide to 302nd

On August 12, 2025, Gartner (NYSE:IT) closed with a 1.51% gain despite a 21.47% drop in trading volume to $360 million, ranking it 302nd in daily liquidity. The stock has fallen 32.9% since its Q2 earnings report, reflecting broader challenges in the IT services sector.

Gartner reported $1.69 billion in Q2 revenue, a 5.7% year-over-year increase, aligning with analyst expectations. The firm highlighted strong performance in adjusted EPS and free cash flow, alongside a 5% growth in contract value. CEO Gene Hall emphasized accelerated stock buybacks and the launch of AskGartner, an AI-powered tool to enhance client access to insights. However, the sector faces headwinds from talent shortages in specialized IT fields and pricing pressures from offshore competitors, which could erode margins.

While digital transformation and AI adoption drive demand for IT consulting, automation risks commoditizing certain advisory services. Gartner’s 14.33 P/E ratio remains below the Business Services sector average, indicating relative affordability. Analysts remain divided, with six reports in the past 90 days recommending a "Hold," though short interest has declined, signaling improving sentiment.

A backtest of a strategy buying the top 500 stocks by daily volume and holding for one day generated a $2,300 profit from 2022 to the present. The approach faced a -15.7% maximum drawdown in early 2023, underscoring market volatility risks despite potential gains.