Baron Generational Growth Fund on Gartner, Inc.
Thesis
The Fund believes Gartner's stock-price weakness reflects excessive investor fear that AI will disrupt syndicated research and information services rather than evidence of fundamental deterioration. It sees little evidence that AI has materially damaged Gartner's business and believes the market has adopted an indiscriminate approach toward companies perceived as vulnerable to AI. Gartner continues to offer a large addressable market, significant competitive advantages, and robust free cash flow generation. The Fund also expects management to use that cash flow for share repurchases while the stock trades at depressed valuations.
“We continue to own Gartner given its large addressable market, significant competitive advantage, and robust free cash flow generation”
Key risks
- AI could ultimately reduce demand for traditional syndicated research services more than the Fund expects.
- Persistent investor concerns about AI disruption could keep Gartner's valuation depressed.