- Ericsson's revenue was down but profit jumped, delighting investors
- Executives said they expect the market to remain flattish in the near term
- But CEO Borje Ekholm argued AI could drive standalone 5G and 6G upgrades
Ericsson has been fighting for stability – and it looks like it finally achieved that in Q3 2025 with an earnings report that just barely beat analyst expectations. But where does it go from here?
Speaking during the company’s earnings call, CEO Borje Ekholm argued that AI will be the next catalyst for network investment.
“As AI workloads move to the edge, demand on the network will increase significantly. These AI applications and AI devices will require wireless technology, but it will also place new demands on the connectivity, such as ultra-low latency, high dependability, guaranteed uplink and very high security demands,” he said.
It is this that will drive increased uptake of standalone 5G and migration to 6G, Ekholm said. But he acknowledged AI-related demand for network upgrades won’t materialize overnight.
“It's not going to be next quarter. It's not going to be Q1, Q2. The amount of capital going into the big data centers, that's going to continue,” he said. “But as applications start to pick up, I think the need for edge compute will be clear.”
Interim growth drivers
In the meantime, Ericsson is looking to other drivers to keep its balance in what it expects will be a flattish market marred by currency fluctuations.
Ekholm pointed to its continued efforts to lower operating costs as one way to do this. He noted the company’s headcount is 6,000 lower than it was a year ago and also said it has scaled back R&D costs by narrowing the focus of its product portfolio and relocating some of its resources to avoid duplication.
But in terms of actual growth, it seems Japan and the U.K. could play a key role in the near-term.
“With Japan being one of the countries with a strong industrial base in such areas as automation and one of the densest networks that have still not built out 5G coverage, we see this as a key market going forward,” Ekholm said.
Meanwhile, Ericsson has signed two massive deals with Vodafone that will effectively increase its market share in the U.K. and set it up to be the operator’s only RAN vendor in Ireland, the Netherlands and Portugal.
Metrics
Net sales fell 9% year on year to $5.89 billion (56.2 billion SEK), however, net income jumped 191% to $1.18 billion (11.3 billion SEK).
By region, sales fell almost across the board year on year, with the Americas down 15%; South East Asia, Oceania and India down 8%; and Europe, Middle East and Africa down 1%. North East Asia was the only bright spot, with 4% growth.
Its staple Networks product area also saw an 11% decline, though Cloud Software and Services sales increased by 3%.
For its part, New Street Research appeared skeptical the future will hold much upside for Ericsson.
“While the market has passed the bottom of the cycle, demand will remain lumpy, and we see no catalysts for growth above current expectations,” NSR’s team wrote.