Ericsson reported its latest financials, with fourth-quarter net sales growing 6% year-on-year (YoY) to $6.7 billion, as the company’s earning calls highlighted defense and military opportunities to stakeholders.

Growth was seen across its three main verticals, with a 4% YoY organic sales bump in its Networks division. Its Cloud Software and Services segment saw a 12% YoY increase. For the full year of 2025, Ericsson achieved $25.8 billion in net sales overall.

On a regional basis, President and CEO Börje Ekholm noted its Americas market area was impacted by “intense” competition in Latin America, offset by slight growth in North America driven by higher software sales. Reported sales in Northeast Asia decreased 5% due to a negative currency effect of $741  million. The same period saw a smartphone license agreement with a Chinese vendor expire, along with license agreements with four Chinese automotive makers.

Southeast Asia, Oceania, and India saw sales increase 19% YoY, with network sales accelerated by 5G deployments in Vietnam. Europe, the Middle East, and Africa saw overall sales grow 13% YoY, with Ericsson highlighting new 5G launches in Morocco and Turkey.

The company added it is expecting a flattish radio access network (RAN) market in 2026, leading it to concentrate more on research and development investments in defense and mission-critical networks, with AI development – the sort which rival Nokia galvanized in the last quarter thanks to a certain Nvidia deal – instead placed more as a driver of long-term demand.

“To date, AI investments have been focused on models, semiconductors, data centers, etc. For sure, these are really critical. But the real economic value will actually come in AI applications and devices,” Ekholm said, noting "drones, humanoids, and connected glasses."

Ekholm added AI use cases need 5G standalone (SA) "today" and later 6G, with "even 5G non-standalone simply not be enough" to handle AI capacity. His comments came days after Ericsson launched 5G-Advanced location services, which rely on a 5G SA core and technology embedded in a single base station to pinpoint a device’s location without using traditional triangulation models, helping reduce broader compute resource needs.

The Ericsson CEO also underscored ongoing operational efficiency, efforts which have seen the company cut up to 1,600 jobs in its homeland of Sweden.

“You have seen that we have reduced the headcount, for example, by 5,000 over the past year. And we expect to continue reducing headcount going forward,” Ekholm said.

Ericsson on the defense?

With AI playing out in the long term for Ericsson’s future, the vendor seems to be stepping back into the past for its near- to mid-term goals, reappraising itself with the defense business that it stepped away from in the late 1990s and early 2000s in its pivot to pure-play telecom.

Without explicitly referring to ongoing geopolitical turmoil, Ekholm referred to the vertical as a “big opportunity” in the earnings call in light of U.S. and "increased" European defense spending.

“Ericsson exited all defense several years ago, so we haven’t really had a presence. So today we’re working in partnerships as well as with defense organizations,” Ekholm said.

Ericsson’s chief broke down the market as moving from proprietary technology solutions into 3GPP-enabled ones, while seeing overlap with its communications offerings and military efforts, noting sensing capabilities that can be used for drone detection.

The CEO declined to elaborate on the size of current defense deals under its belt, but the last quarter saw Ericsson partner with Telia on 5G technologies for the Swedish Armed Forces, while its Canada arm signed a deal with Saab and Calian on Canadian defense capabilities.

There may also be some sizable income from Ericsson's Federal Technologies Group, an offshoot specializing in 5G and 6G services for U.S. defense agencies. Those efforts have yet to be broken down in any Ericsson financials since its inception in 2024, including this week's report. But Ekholm did go on to recognize “very big numbers” in the potential of the opportunity.

“I’m not sure it’s going to be that [big], but we think it’s, compared to the rest of the opportunity we have, sizeable," Ekholm said. "[Yet] it’s not going to be material compared to our overall SEK 50 billion ($5.5 billion) we spend on R&D.”