Baron Capital, an investment management company, released its Q1 2026 investor letter for the “Baron Small Cap Fund”. A copy of the letter can be downloaded here. Baron Small Cap Fund was down 7.90% (Institutional Shares) in Q1 2026, trailing the Russell 2000 Growth Index’s -2.81% return. The first quarter started with optimism driven by expectations for higher growth and interest rate cuts, while the market sentiment shifted at the end of the quarter. The release of new AI applications unsettled markets due to fears of disruption and long-term effects on software, causing stocks in these sectors to decline. In late February, the Iran war caused oil prices to spike, leading to rising interest rates and inflation. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Baron Small Cap Fund highlighted stocks in Gartner, Inc. (NYSE:IT). Established in 1979, Gartner, Inc. (NYSE:IT) is a research and advisory company that provides business and technology insights to help businesses make informed decisions. The one-month return of Gartner, Inc. (NYSE:IT) was -0.65%, and its shares lost 65.88% of their value over the last 52 weeks. On May 4, 2026, Gartner, Inc. (NYSE:IT) stock closed at $147.71 per share, with a market capitalization of $9.97 billion.
Baron Small Cap Fund stated the following regarding Gartner, Inc. (NYSE:IT) in its Q1 2026 investor letter:
“Syndicated research provider Gartner, Inc. (NYSE:IT) detracted from performance as valuation multiples compressed amid rising concerns around AI for IT services companies. Against this backdrop, shares of Gartner came under pressure after the company reported contract value growth that was slightly below expectations, underscoring the dramatic valuation compression at play. We continue to own Gartner given its large addressable market, significant competitive advantages, and robust free cash flow generation. Management has been extremely aggressive with share repurchases at these depressed valuation levels and remains steadfast in their belief that growth will rebound.”
Gartner, Inc. (NYSE:IT) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 50 hedge fund portfolios held Gartner, Inc. (NYSE:IT) at the end of the fourth quarter, which was 42 in the previous quarter. In the fourth quarter of 2025, Gartner, Inc. (NYSE:IT) reported revenue of $1.8 billion, reflecting an increase of 2% year-over-year. While we acknowledge the potential of Gartner, Inc. (NYSE:IT) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
