What Happened?
Shares of research and advisory firm Gartner (NYSE: IT) jumped 23.7% in the afternoon session after the company reported second-quarter results that topped Wall Street's expectations for both revenue and profit. The company posted revenue of $1.68 billion and adjusted earnings of $4.37 per share, handily beating analysts' estimates.
A key driver for the positive reaction was a significant improvement in profitability. Gartner's adjusted operating margin expanded to 25%, up 5.6 percentage points from the year-ago period, signaling greater operational efficiency. Furthermore, the firm generated strong free cash flow of $378 million for the quarter. These better-than-expected results, particularly the robust earnings and margin growth, appeared to fuel investor confidence.
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 25 moves greater than 5% over the last year. But moves this big are rare even for Gartner and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 21 days ago when the stock dropped 3.5% on the news that IBM issued a second-quarter revenue warning, suggesting that the enterprise shift toward AI hardware may be constricting demand for large-scale consulting projects. IT services & consulting peers traded in sympathy with the decline
IBM pre-announced adjusted earnings of $2.93 per share on $17.2 billion in revenue, missing Wall Street estimates of $3.01 and $17.86 billion, respectively.
In a letter to investors, CEO Arvind Krishna revealed that the shortfall was driven by a sudden reprioritization of enterprise budgets in late June. Clients shifted their capital expenditure toward servers, storage, and memory chips to secure supply-constrained hardware ahead of expected price increases, causing "numerous large deals" to stall.
When chief information officers redirect capital to hoard memory chips and servers, it suggests they are delaying the massive software deployments that generate billable integration work. Because IBM often competes with these global systems integrators for enterprise contracts, investors are treating its delayed deal closures as a likely bellwether for the broader group.
Gartner is down 20.7% since the beginning of the year, and at $187.94 per share, it is trading 44.2% below its 52-week high of $336.71 from August 2025. Investors who bought $1,000 worth of Gartner’s shares 5 years ago would now be looking at only $648.54.
ALSO WORTH WATCHING: Nvidia’s Quiet Partner. Nvidia’s chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all.
Every AI server needs specialized infrastructure the chip companies don’t make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar. Claim The Stock Ticker Here for FREE.
