MW CEOs are acting like it's the 'Great Recession' - and that's crushing this stock

By Tomi Kilgore

IT consultancy Gartner says CEO confidence has fallen at the fastest rate on record - with corporate leaders behaving as they did in 2009 and during the COVID pandemic

Shares of Gartner Inc. were having their worst day in 26 years on Tuesday, after the information-technology consulting firm painted a bleak picture of what corporate America thinks about the economy.

During the three months through June 30, Gartner Chief Executive Gene Hall said, confidence among chief executives at U.S. companies nosedived to recessionary levels.

"Among the fastest drops ever recorded in a Gartner survey, 78% of CEOs indicated they're implementing cost-cutting measures to safeguard performance," Hall said, according to an AlphaSense transcript of a call with analysts.

Gartner's stock (IT) also nosedived, as it plunged 27.5% Tuesday toward a three-year low - enough to pace the S&P 500 index's SPX losers on the day. The stock was also headed for its biggest one-day selloff since the record 28.1% plunge it suffered on Oct. 29, 1999.

Hall said biggest problem Gartner had during the second quarter was with the U.S. government, as the Department of Government Efficiency's cutbacks made it harder for clients to spend money.

Meanwhile, companies facing the impacts of President Trump's tariffs started slashing costs rather than spending on new projects - a practice that was imitated even by companies not impacted by tariffs.

And even when there was business to be had, it took a lot longer than usual to close.

"Purchase decisions that were previously made by functional leaders are now being escalated to the [chief financial officer] or even the CEO," Hall said. "These changes occurred at a record pace, impacting our performance during [the second quarter]."

Hall said companies were behaving as they typically have during economic recessions. He noted that whenever companies are under stress, they control costs by putting "more friction" in the decision-making process.

"We saw that exact same behavior in the pandemic back in 2021," the Gartner CEO said. "We saw the same behavior back in 2009 during the Great Recession."

For 2025, the company cut its guidance for total revenue to $6.46 billion from $6.54 billion, below the average analyst estimate for 2025 revenue of $6.57 billion.

However, it raised its outlook for full-year adjusted earnings per share, excluding nonrecurring items, to $11.75 from $11.70.

For the second quarter, net income rose 4.9% from a year ago to $241 million, while adjusted EPS of $3.53 beat the analyst consensus of $3.30. That marked at least the 21st straight quarter of bottom-line beats for Gartner, based on available FactSet data going back to August 2020.

Revenue grew 5.7% to $1.69 billion, just above the FactSet analyst consensus of $1.68 billion.

Gartner's stock has now lost half its value in 2025, while the S&P 500 index has gained 7.3%.

-Tomi Kilgore

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August 05, 2025 15:42 ET (19:42 GMT)

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