Zebra Stock Falls Despite Earnings Beat

Zebra Technologies shares dropped more than 7% Tuesday even as the company beat third-quarter expectations and raised its 2026 forecasts.

Updated on Nov. 3, 2026 in Public Companies

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Zebra Technologies reported adjusted earnings of $4.95 per share on revenue of $1.614 billion, up 22.3% year over year, both ahead of analyst estimates. The company also raised its full-year 2026 revenue and adjusted earnings outlook, but its stock still fell more than 7% on Tuesday.

Why it matters

Gross margin narrowed to 45.7% from 48% a year earlier as higher memory costs and business mix weighed on profitability. Rising memory component costs weighed on investor sentiment despite the stronger top-line results.

Connected Frontline revenue jumped 34.6% to $949 million while Asset Visibility & Automation revenue rose 8.1% to $665 million, and organic sales grew 11.3%. Adjusted EBITDA margin held flat at 21.6%, even as gross margin fell by 2.3 points.

The players

Zebra Technologies

A publicly traded maker of barcode scanners, mobile computers and asset-tracking systems used in warehouses, retail and healthcare.

The details

Zebra said higher memory costs and business mix weighed on profitability, partly offset by favorable currency movements. The company plans to offset memory costs through higher prices and other measures, and it increased its 2026 memory-cost estimate by $25 million to approximately $145 million.

Tuesday, November 3, 2026: Zebra stock fell 7% after third-quarter results were released.
Early October: Zebra introduced additional price increases to manage 2027 costs.
First half of 2027: Memory component prices are expected to keep rising.
Second half of 2027: Memory component prices are expected to ease.

Market Dynamics

Zebra's raised memory-cost estimate to $145 million reflects a memory component price cycle that the company expects to keep rising through the first half of 2027 before easing. That cost pressure is what is squeezing its gross margin even as revenue grows.

Zebra said it plans to offset higher memory costs through price increases and other measures, which could affect what businesses pay for its scanners and mobile computers. Investors weighing the stock should watch whether those price moves keep gross margin from narrowing further.

The takeaway

Strong top-line growth does not guarantee investor confidence when input costs are rising. Watch gross margin trends alongside revenue when evaluating hardware companies facing component price pressure.

What happens next

Memory component prices are expected to keep rising through the first half of 2027 before easing in the second half, which will shape Zebra's cost outlook.