# ERIC Stock: Ericsson Beat on Profit and Fell 13% — Blame AI

Page: https://stenobird.com/podcast/charged-alpha-stock-encyclopedia-7819792/eric-stock-ericsson-beat-on-profit-and-fell-13-blame-ai
Text version: https://stenobird.com/podcast/charged-alpha-stock-encyclopedia-7819792/eric-stock-ericsson-beat-on-profit-and-fell-13-blame-ai.md
Podcast: [Charged Alpha Stock Encyclopedia](https://stenobird.com/podcast/charged-alpha-stock-encyclopedia-7819792)
Published: 2026-07-15T15:23:40+00:00
Episode link: https://chargedalpha.podbean.com/e/eric-stock-ericsson-beat-on-profit-and-fell-13-%e2%80%94-blame-ai/
Audio file: https://mcdn.podbean.com/mf/web/t8dhid6mafh5kq8o/audio_b.mp3
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JSON: https://stenobird.com/v1/public/podcasts/charged-alpha-stock-encyclopedia-7819792/episodes/eric-stock-ericsson-beat-on-profit-and-fell-13-blame-ai
Duration seconds: 668

## Resource

Ericsson (ERIC) Q2 2026 — Ericsson's Q2 2026 adjusted gross margin rose to 48.4% (Networks 50.4%, a multi-year high) and EPS met consensus, but the ADR fell ~13% — its worst earnings reaction in three years — after management warned that AI-driven memory and component cost inflation will squeeze Q3 Networks margins to 48-50%, revenue came in light, and North America declined. Ericsson beat on profit and got hammered. The reason is a genuine irony: the same AI boom that underpins its long-term bull case (more data means more network spending) is bidding up the memory and chips inside its own radios, right now. So the demand is a later story and the cost is a now story, and the market repriced for the gap. But underneath: a real margin turnaround (48.4% adjusted, Networks at 50.4%), $6.2B of net cash (a fifth of the market cap), a ~3% dividend, and a ~13x P/E. After a 13% drop, that looks oversold. Our call: a SPECULATIVE BUY, fair value ~$11.50 — and we're MORE constructive than the bearish Street, whose targets sit right around the price. THE CALL: SPECULATIVE BUY (3/5, A CHEAP TURNAROUND THE MARKET OVERSOLD) — base-case value ~$11.50 vs ~$10.10 today. What to watch: Q3 gross margin holding at the high end of the 48-50% guide (proving the AI-cost hit is contained), North America stabilizing, and the memory-cost inflation staying a couple of quarters rather than a multi-year headwind Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.

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