Ericsson Q3 2026: I Was Wrong About Margins, But I'm Not Buying

Agar Capital 5.81K Followers Follow Summary Ericsson delivered better-than-expected quarterly profitability, prompting an upgrade from Sell to Hold based on improved networks and software margins. ERIC's Networks division achieved a 50.3% gross margin, surpassing guidance, while Cloud Software and Services posted a 12.8% adjusted EBITA margin, meeting key thresholds. Despite the margin improvements, concerns remain about 2027 sustainability due to rising component costs, limited pricing power, and non-recurring revenue boosts. At current prices near SEK 100 per share, I see limited upside; holding is justified, but I would await a better risk/reward entry for new positions. Marcus Lindstrom/iStock Unreleased via Getty Images Thesis I've covered Telefonaktiebolaget LM Ericsson ( ERIC ) in the past. In July , I wrote an article in which I stated my concerns about rising component costs across the board, which, in my view, would This article was written by Agar Capital 5.81K Followers Follow Agar Capital is a portfolio manager with experience across asset allocation, portfolio construction, macroeconomic research and fundamental equity analysis. Agar Capital currently works in European asset management, with a focus on multi-asset strategies, dynamic asset allocation, macro-driven positioning and equity selection.The investment approach combines bottom-up fundamental analysis, valuation and macroeconomic research, with a particular focus on growth, momentum and long-only strategies. Areas of research include technology, macroeconomics, portfolio strategy and selected commodity themes.Professional training includes Bloomberg Market Concepts, Bloomberg ESG certification and ESG-related corporate finance studies.Associated with Trade The Narrative Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.