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Wednesday, February 19, 2025

Ericsson’s AI Push Raises Questions About Telecom AI Investments

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On January 30, 2025, Ericsson announced the launch of Cognitive Labs, a research-driven initiative dedicated to advancing AI for telecoms. Unlike traditional R&D centers, Cognitive Labs will operate virtually, focusing on AI technologies such as Graph Neural Networks (GNNs), Active Learning, and Large-Scale Language Models (LLMs).

Ericsson claims these innovations will power the next generation of mobile communications and expand AI’s impact on other sectors, such as healthcare. The company has also emphasized its commitment to open-source collaboration, engaging with the AI community to drive development for broader societal benefits.

However, tech analysts point out that Ericsson has not disclosed the financial details of this initiative. There is no mention of the actual cost of running Cognitive Labs or the investments required for AI research in telecoms. Critics argue that while the initiative sounds promising, the financial viability of such projects remains unclear, especially as AI infrastructure spending continues to rise globally.

This announcement has ignited discussion within the telecom industry about the rising costs of AI development. Investors are now questioning whether AI spending in telecoms will yield tangible returns, especially amid broader economic uncertainties. With several telecom giants set to release their financial reports in the coming weeks, stakeholders expect clearer insights into their AI investment strategies.

Impact on Stocks

Following the announcement, Ericsson’s stock dipped by 2.7%, reflecting investor skepticism over the long-term returns on AI investment. Meanwhile, competitors in the telecom AI sector also saw minor fluctuations, with Nokia declining by 1.9% and Huawei-related telecom stocks showing mixed reactions.

As AI investments continue to rise, industry experts predict that scrutiny from investors will only intensify, pushing telecom companies to be more transparent about their spending strategies and expected returns.

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