Zebra Technologies Stock Jumped 20% Today on the Best Problem in Tech

Zebra Technologies (NASDAQ: ZBRA) banal broke into a tally connected Tuesday morning, up 20.3% arsenic of 11 a.m. ET. The rugged-device and asset-tracking specializer reported beardown second-quarter results earlier the opening bell, and the banal is present trading astatine caller 52-week highs.

Nobody saw this coming, including Zebra

Zebra's adjusted net deed $6.35 per share. Analyst statement was $4.36. Zebra's ain guidance successful May topped retired astatine $4.50, truthful absorption bushed the optimistic extremity of its ain homework by 41%. Sales roseate 20.4% to $1.56 billion, with integrated maturation of 9.2% and gains successful each region.

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A $73 cardinal tariff betterment flattered the quarter, and lone $41 cardinal of that promised payback has materialized arsenic currency truthful far.

But that's OK. Strip retired the tariff payback benefits, and net inactive travel successful adjacent $5.10 per share. Zebra's bushed survives the tariff asterisk.

Management besides raised full-year net guidance to astir $21, up from $18.50 astatine the midpoint 3 months ago. Free currency travel guidance moved past $1 billion. That's a batch of upside for 1 quarter's work.

The representation bottleneck is simply a bragging constituent

Here's the bullish twist. Orders don't bounds zebra; it's constricted by the aforesaid representation chips that AI information centers are soaking up.

Memory costs should tally astir $120 cardinal higher this year, which drags third-quarter borderline projections backmost from 27.7% toward the 22% range. CEO Bill Burns called the precocious extremity of the income usher "unconstrained" connected the net call. The debased extremity is what happens if chips don't amusement up.

In a little one-on-one call, I asked Burns whether customers were skimping connected representation to support costs down.

"It's virtually the opposite, Anders," helium said. The biggest customers are ordering other capableness astatine higher prices, due to the fact that they'd alternatively over-buy contiguous than observe successful 2028 that their scanners can't tally the AI models they want.

And representation proviso was a cardinal crushed for the Q2 surprise.

"We were capable to get much than we anticipated going into the quarter, and truthful we went implicit the apical extremity of our scope due to the fact that the request is there," Burns explained.

Paying much for chips you tin hardly get is an unpleasant mode to grow. But it's inactive growth, and the banal trades astatine astir 16.5 times the caller full-year net guidance.