Why Zebra Technologies Stock Jumped 19.5% This Morning

Shares of Zebra Technologies (NASDAQ: ZBRA) hit a spirited gallop on Tuesday, rising as much as 19.5% around 10:20 a.m. ET. The asset-tracking and data management expert was up by 17.3% 40 minutes later. Zebra published strong Q1 2026 results in the early morning hours.

Image source: Zebra Technologies.

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The earnings that started the stampede

Let's start with the headline figures. Net sales rose 14.3% year over year, landing at $1.50 billion. Adjusted earnings jumped from $4.02 to $4.75 per share, which works out to an 18% increase. Your average analyst would have settled for earnings near $4.26 per share on revenue around $1.48 billion.

Looking ahead, Zebra's management set next-quarter and full-year earnings guidance well above the current Street consensus targets.

Why the stock is trotting higher

Zebra beat estimates and raised guidance. Full-year EPS guidance of $18.30-$18.70 came in well above the $17.50 consensus. That muscular combo is the simple explanation for Tuesday's big gains.

The company is fighting supply side issues, though. Memory chips are very expensive these days, as AI data centers are sucking up the available supply of high-performance memory chips. So, memory component costs will reduce Zebra's gross margins by about 2 points next quarter.

In a quick phone chat, CEO Bill Burns told me the company is already pivoting to address this challenge.

"The memory suppliers are trying to consolidate into fewer memory components being manufactured from their perspective," he said. "Therefore, they're guiding us into saying, 'Look, move to this next memory type.' It's not even available yet, but we'll have more availability from that moving forward because that's where they're taking their production and focus."

Meanwhile, Zebra is putting its cash to work. The company repurchased $300 million in shares during Q1 alone, and Burns made clear there's more to come: "We have the flexibility to use our entire free cash flow for buybacks if we want to."

With shares still down roughly 45% from their 2021 highs and 16% over the last year, management clearly sees value here.

So do I.

The stock trades at about 14 times forward earnings. That's downright cheap for a company guiding to double-digit revenue growth and $900 million in annual free cash flow. Tuesday's pop is a start, but I think Zebra has more room to run.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Zebra Technologies. The Motley Fool has a disclosure policy.