Baron Partners Fund on Gartner, Inc.
Thesis
Gartner's recent contract-value slowdown reflects temporary public-sector cost cutting and caution among companies exposed to tariffs and macroeconomic uncertainty. Baron rejects the market's view that generative AI will make Gartner's research business obsolete. The company owns a large proprietary dataset generated through hundreds of thousands of interactions with technology buyers, sellers and users, which the fund believes cannot be replicated easily by general AI models. AI should instead help Gartner surface insights faster and improve delivery. Baron expects contract-value growth to reaccelerate as temporary headwinds fade, while repurchases at depressed valuations should increase per-share value.
“Rather, AI should be an accelerant for Gartner, enabling the company to surface insights faster and deliver them in more impactful formats.”
Key risks
- Contract-value growth may not reaccelerate
- AI could prove more disruptive to research services than the fund expects
- Public-sector and macroeconomic weakness could persist