Zebra: 3 Key Takeaways for Long-Term Investors

Zebra, the manufacturer of enterprise mobile computers and bar code scanners, has provided guidance for full-year revenue growth of 17% for 2026, accompanied by record quarterly sales. To counter rising memory chip costs, the company is implementing price increases.

Three key statements from management shed light on how Zebra is navigating component supply challenges. The $145 million cost drag for the full year, which surpassed previous estimates of $120 million, stems from customers purchasing higher volumes of mobile hardware. In response, the company raised mobile computing product prices by approximately 15% in October to counterbalance component costs going into 2027.

This adjustment brings the year's estimate of the memory cost headwind to $25 million higher than the prior projection.

Frontline workers in retail and transportation logistics are upgrading their handheld computers to run AI applications directly on the hardware, rather than transmitting data to cloud servers. This local processing capability is aiding Zebra in securing enterprise hardware contracts against competitors. A retail customer in EMEA recently opted for Zebra's premium mobile computers over a rival's due to the device's capacity to optimize AI on the device.

Since acquiring Elo Touch one year ago, management has been leveraging the acquisition to fortify its position in self-service checkout and point-of-sale systems markets. Cross-selling to legacy accounts is being viewed as a key long-term growth driver, though it is still in the early stages of development. Elo Touch continues to be a significant growth driver as the industry embraces self-service.

Demand for automated supply chain tracking across retail and healthcare accounts remains robust, with management anticipating 2027 revenue to extend near the top of its long-term guidance range. Zebra operates in a $35 billion market that offers substantial growth potential as customers incorporate more automation and AI into their physical operations.

To safeguard product shipments amidst global transportation customers' plans for multiyear hardware upgrades, the company has successfully qualified five memory-component suppliers (with two more expected in 2027) and expanded its inventory by $90 million. Collectively, these strengths endow Zebra with a resilient, profitable growth model, providing the financial flexibility to generate long-term shareholder value.