Why Did IBM Stock Beat Gartner Over Five Years?
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Two companies in the same industry grew their sales at about the same pace over the last three years. Over the five years to October 2026, however, their stocks moved in opposite directions. International Business Machines (IBM) rose 147.2%, while Gartner (IT) fell 31.3%. Where would you guess the gap came from: faster sales, bigger profits, or investors paying more for those profits?
Who Has Beaten Gartner Over Five Years?
Gartner trailed most of its industry. Among the 28 companies in IT Consulting & Other Services, the median stock fell 23.5% over those five years. That decline was smaller than Gartner’s 31.3% drop, though 12 peers recorded a lower return.
Three companies with similar sales growth beat Gartner by a wide margin: IBM, Adeia and Cognizant Technology Solutions (CTSH). The table shows the first two. IBM finished the five-year period 178.5 percentage points ahead of Gartner.
| Company | Sales growth, 3-year average | P/E | 1-year | 3-year | 5-year |
|---|---|---|---|---|---|
| Gartner (IT) | 4.0% | 18.8x | -15.0% | -37.0% | -31.3% |
| International Business Machines (IBM) | 4.5% | 22.1x | -8.5% | 101.1% | 147.2% |
| Adeia (ADEA) | 7.0% | 20.3x | 34.0% | 179.3% | 165.8% |
Stock price change to 2026-10-21, excluding dividends. Companies in IT Consulting & Other Services whose sales grew within 4 points of Gartner’s. P/E: latest close over the last four quarters’ earnings per share.
Adeia (ADEA) finished even further ahead, beating Gartner by 197.1 points. A weak industry is only part of Gartner’s story. The stocks of IBM and Adeia more than doubled, even though both companies grew their sales within 4 points of Gartner’s pace over three years.
Did IBM Grow Faster Than Gartner?
No. IBM and Gartner grew their sales at about the same pace over the last three years. IBM averaged 4.5% annual sales growth, while Gartner averaged 4.0%. The two companies sell different things. IBM sells software, including Red Hat, along with consulting and the servers and storage that run its clients’ mission-critical work. Gartner mostly sells research for senior executives.
Faster sales growth is not where IBM’s lead came from.
Where Did The Gap Come From?
Part of the gap came from the price investors pay for each dollar of profit. In June 2021, investors paid 36.3 times earnings for Gartner’s stock and 23.6 times for IBM’s. Today, they pay 18.8 times for Gartner, about half as much. IBM’s multiple is little changed at 22.1 times, based on earnings through June, before IBM reported third-quarter results after the October 21 close. These multiples date from four months before the five-year price window starts, so they do not line up with the stock moves.
Profit per share rose 90.1% at IBM and 71.8% at Gartner between the twelve months to June 2021 and the twelve months to June 2026. IBM’s net income more than doubled over the same span, rising 101.1%.
Gartner’s operating margin rose just 1.9 points, and its net income grew 35.6%, a slower pace than its sales, which rose 47.6%. A drop of about a fifth in the average share count gave each remaining share a larger part of that profit. Higher profit per share helped, but the multiple mattered more: Gartner’s profit per share rose while the price investors assigned to it fell.
Gartner reported a 22.6% operating margin in fiscal Q2 2026, up from 19.4% in fiscal Q2 2025. Management said effective expense management helped the company beat expectations that quarter. Most of what Gartner sells is Insights, its research for senior executives, which brought in 78.1% of revenue in fiscal 2025.
What To Watch In Gartner’s Next Report
On the August 4, 2026 call, management raised its 2026 outlook. The company now expects a full-year EBITDA margin, its own profit measure, at or above 24.6%. Whether Gartner’s EBITDA margin stays on track for at least 24.6% is the figure to watch in its next quarterly report.
How To Act On IT?
Not necessarily on Gartner alone, if your goal is long-term wealth. Wealth is built by owning the companies that keep outperforming, the leaders of their industries, wherever they are. Here are two companies from Gartner’s own industry that have beaten it. Over the five years to October 2026, International Business Machines stock rose 147.2%, and Adeia stock rose 165.8%, while Gartner stock fell 31.3%.
Finding companies like these takes comparison across industries and sectors, and that is what the Trefis High Quality (HQ) Portfolio does. It holds 30 quality companies in equal weight and, since its inception in September 2020, has returned more than 105%, ahead of a benchmark that combines the S&P 500, S&P Mid-cap, and Russell 2000. See how we find the leaders.
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