Swedish telecom equipment maker Ericsson (ERIC) found itself at the center of a sharp market sell-off on Tuesday after warning that soaring memory chip costs, fueled by the relentless artificial intelligence (AI) boom, are beginning to put pressure on its business. The cautionary remarks overshadowed the company's fiscal 2026 second-quarter earnings report, sending the stock tumbling nearly 13.5% on July 14, which happens to be the stock’s lowest level since February and putting it on track for its steepest one-day decline since early 2025.
The rapid global build-out of AI data centers has tightened memory chip supply, pushing up prices and already forcing companies like Apple (AAPL) to raise the prices of their products. Ericsson's warning suggests the impact of AI-driven component shortages may now be spreading well beyond smartphones and PCs. CFO Lars Sandström told Reuters that the AI infrastructure race is putting pressure on the entire industry, including Ericsson, though the financial impact was limited in the second quarter thanks to the company's resilient component supply chain.
