Enterprise data capture company Zebra Technologies (NASDAQ: ZBRA) reported revenue ahead of Wall Street’s expectations in Q3 2026, with sales up 22.3% year on year to $1.61 billion. Guidance for next quarter’s revenue was optimistic at $1.65 billion at the midpoint, 2.8% above analysts’ estimates. Its non-GAAP profit of $4.95 per share was 0.9% above analysts’ consensus estimates.

Is now the time to buy ZBRA? Find out in our full research report (it’s free for active Edge members).

StockStory’s take

Zebra’s third quarter saw strong top-line growth, but the market reacted negatively, likely due to investor concerns about margin pressures and rising memory costs despite solid revenue and earnings performance. Management attributed the quarter’s results to broad-based strength across all segments, with mobile computing and the Elo Touch acquisition providing notable contributions. CEO Bill Burns highlighted “very strong customer demand” and the company’s ability to maintain operating leverage even as higher memory costs affected gross margins. The quarter also benefited from proactive supply chain management and continued expansion in machine vision and healthcare.

For the coming quarter and beyond, Zebra’s guidance is underpinned by resilient customer demand and ongoing investments in AI-enabled solutions, particularly in retail and transportation. Management expects pricing actions and further memory supply arrangements to help offset input cost pressures, while efficiency initiatives remain a key priority. CFO Nathan Winters explained that recent price increases on mobile computing products are intended to “close the gap on the memory cost impact,” and management is confident that these actions, combined with strong backlog and pipeline, will support profitable growth into next year. Zebra is also focused on expanding its supplier base to ensure component availability and flexibility.

Key insights from management’s remarks

Management credited the quarter’s performance to robust demand in core end markets and effective mitigation of input cost pressures, while investments in AI and automation continue to drive product differentiation.

• Mobile computing momentum: Zebra’s Connected Frontline segment saw particularly strong growth, attributed to increasing customer investment in mobile computers with embedded AI and RFID capabilities. These upgrades are being driven by both refresh cycles and new deployments across industries, especially in retail and transportation.
• Elo Touch acquisition synergy: The Elo Touch acquisition, now past its first year, contributed high single-digit growth and enabled Zebra to offer more integrated solutions, particularly in self-service and point-of-sale environments. Management sees ongoing potential for revenue synergies as the two portfolios become more closely aligned.
• Machine vision and automation gains: The Asset Visibility & Automation segment benefited from strong demand in manufacturing and logistics, with machine vision solutions outperforming expectations—especially in automotive, semiconductor, and logistics applications. The Photoneo acquisition also contributed positively to the segment’s growth pipeline.
• Memory supply and cost management: Zebra’s ability to secure additional memory supply allowed it to fulfill elevated demand, but higher memory costs compressed gross margins. Management responded with targeted price increases and ongoing supplier diversification, qualifying five new memory suppliers to reduce risk and improve cost flexibility.
• AI product traction: Early adoption of Zebra’s Frontline AI Suite, including a rollout with a major North American retailer, underscored the company’s strategy to embed AI across its product portfolio. Management views AI-enabled workflows as a long-term competitive differentiator and sees growing customer interest in leveraging both hardware and software solutions for automation.

Drivers of future performance

Management expects continued growth, supported by strong customer demand for automation and AI, but flagged input cost inflation and ongoing efficiency efforts as key themes shaping next quarter’s results.

• Price actions to offset costs: Zebra recently implemented price increases, particularly on mobile computing devices, to mitigate the impact of higher memory component costs. Management expects these actions to have a modest near-term effect but anticipates more meaningful top-line benefits in the coming year as pricing flows through to customers.
• Supply chain and supplier diversification: Ensuring a stable supply of memory and other key components remains a top priority, with Zebra actively expanding its supplier base to provide greater flexibility and resilience. Management believes these steps will help support both revenue growth and margin protection amid a dynamic component market.
• AI and automation investment: Zebra plans to continue investing in its AI-enabled solutions and workflow automation tools, aiming to capitalize on early customer adoption trends and further differentiate its offerings in core verticals such as retail, transportation, manufacturing, and healthcare. Management sees this as a key driver for long-term profitable growth, even as input costs and macroeconomic uncertainties persist.

Catalysts in upcoming quarters

For the next few quarters, our analysts will be closely watching (1) the pace and impact of Zebra’s price increases on both volumes and margins, (2) the success of supplier diversification and memory component cost containment, and (3) adoption rates of AI-enabled solutions, particularly in retail and transportation. Execution on efficiency initiatives and continued integration of recent acquisitions will also be key areas of focus.

Zebra currently trades at $330.91, down from $361.13 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free).

High quality stocks for all market conditions

ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.

Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.

Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.