Ericsson cautions on rising AI bill as profit sinks

Ericsson CEO Borje Ekholm ( pictured ) warned the vendor will face increasing costs, especially in semiconductors, caused by rising AI demand, as the company reported double-digit declines in revenue and net income in Q1 2026. Net sales fell 10 per cent year-on-year to SEK49.3 billion ($5.4 billion), which it partly attributed to negative currency impact. Net income declined 79 per cent to SEK887 million due to the same issue, along with restructuring costs. Breaking out segments, net sales in Mobile Networks dropped 8 per cent to SEK32.9 billion, 9 per cent in Cloud Software and Services to SEK11.8 billion, and 30 per cent in Enterprise to SEK4.2 billion. Ericsson noted sales in North America suffered due to accelerated network investments in the prior year, along with short-term reallocation of customer spend following network operator consolidation. 5G launches and network modernisation work boosted its performance in Europe, Middle East and Africa. Ekholm said the results demonstrated continued resilience in a dynamic market, while pointing to healthy gross margins and strong cash flow to “reflect the progress we have made in recent years, reducing reliance on geographic mix and strengthening our foundations globally”. He added multi-year investments in building a resilient, diversified, supply chain was helping Ericsson deliver for customers during “geopolitical and macroeconomic uncertainties”. It plans to offset rising costs driven by AI demand “by working closely with customers and suppliers, and through product substitution and efficiency actions”. He also warned the company continued to expect a “flattish” RAN market, pinning hopes its mission-critical and Enterprise position will be able to grow faster than the mobile networks market. The post Ericsson cautions on rising AI bill as profit sinks appeared first on Mobile World Live .