ZBRA Q2 Deep Dive: Memory Supply Improvements and AI-Driven Demand Fuel Strong Results

Enterprise data capture company Zebra Technologies (NASDAQ:ZBRA) announced better-than-expected revenue in Q2 CY2026, with sales up 20.4% year on year to $1.56 billion. On top of that, next quarter’s revenue guidance ($1.56 billion at the midpoint) was surprisingly good and 4.1% above what analysts were expecting. Its non-GAAP profit of $6.35 per share was 45.1% 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 second quarter results were driven by broad-based demand across its retail, manufacturing, and healthcare markets, as well as improved memory supply that allowed the company to meet more customer orders. According to CEO Bill Burns, “Customers are investing to digitize and automate frontline operations and our integrated portfolio is central to their progress.” The company also benefited from strong contributions from the recently acquired Elo Touch business and the realization of tariff recoveries, supporting both top-line growth and margin expansion.

Looking ahead, Zebra’s guidance reflects ongoing customer investment in automation, AI-powered solutions, and continued progress in securing memory supply. Management pointed to a robust backlog and project pipeline, particularly in manufacturing and machine vision. CFO Nathan Winters emphasized that proactive supplier co-planning and expanded sourcing strategies are expected to mitigate future component cost headwinds, stating, “We have confidence that we’ll be able to continue to secure the volume we need to support our customers into 2027 and the growth that’s required.”

Key Insights from Management’s Remarks

Management credited the quarter’s performance to strong end-market demand, successful memory supply mitigation, and operational execution, with pricing actions and portfolio expansion supporting profitability and growth.

• Retail and e-commerce demand: Zebra saw double-digit growth in retail, fueled by increased consumer expectations for rapid delivery and the adoption of self-service technologies. The Elo Touch acquisition contributed to this momentum, particularly in modernizing point-of-sale and self-checkout solutions.
• Manufacturing and machine vision: The manufacturing sector delivered strong results, with significant demand from electronics and pharmaceuticals. Zebra’s focused investments in machine vision, including AI-driven optical character recognition and quality control, led to notable outperformance and expanding use cases.
• Healthcare segment expansion: Healthcare was Zebra’s fastest-growing vertical, driven by increased adoption of enterprise-grade mobile computing for caregivers, as well as new deployments of self-service and track-and-trace solutions. The integration of Elo’s offerings into healthcare settings is opening new growth avenues.
• Memory supply and pricing actions: Management highlighted successful mitigation of memory component shortages through direct supplier partnerships, alternative sourcing, and qualifying new suppliers. Proactive price increases helped offset rising memory costs, while operational improvements supported margin expansion.
• AI and RFID advancements: Zebra’s AI-powered solutions, especially within its new line of mobile devices and wearables with embedded RFID, are enhancing customer productivity and visibility. The company is capitalizing on early-stage automation trends, with RFID adoption broadening beyond retail into logistics, manufacturing, and healthcare.

Drivers of Future Performance

Zebra’s forward guidance is anchored by ongoing customer adoption of automation and AI solutions, alongside disciplined cost management and supply chain strategies to offset component volatility.

• Continued automation and AI adoption: Management expects sustained demand as customers digitize frontline operations and deploy Zebra’s AI-powered hardware and software across multiple industries. The company’s Connected Frontline and Asset Visibility & Automation segments are projected to benefit from ongoing automation trends and low market penetration rates.
• Memory supply and cost management: Zebra’s ability to meet demand remains partly constrained by memory component availability. However, the company is actively expanding its supplier base and qualifying new memory technologies, with ongoing price increases and operational initiatives aimed at fully mitigating cost pressures into next year.
• Broader portfolio integration: The integration of Elo Touch and expansion of AI, RFID, and machine vision offerings are expected to drive cross-selling opportunities and entry into new verticals. Management also highlighted that disciplined restructuring and productivity initiatives will support margin stability, even as the company invests in go-to-market expansion and R&D.

Catalysts in Upcoming Quarters

In the quarters ahead, the StockStory team will be monitoring (1) Zebra’s ability to secure and diversify memory supply to meet growing customer demand, (2) the continued expansion and integration of AI-powered and RFID-enabled devices across new customer segments, and (3) execution on cross-selling opportunities resulting from the Elo Touch acquisition. Ongoing progress in machine vision and healthcare will also serve as important indicators of sustained momentum.

Zebra currently trades at $366.65, up from $285.81 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).

Now Could Be The Perfect Time To Invest In These Stocks

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.

Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum 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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.