LM Ericsson Telephone (ERIC) shares surged 7.92% in pre-market trading on Tuesday following the release of its impressive first-quarter results. The Swedish telecom equipment giant reported earnings that significantly surpassed analysts' expectations, driven by strong sales growth in North America and improved margins across all business segments.

Ericsson's adjusted earnings before interest and taxes reached 6.21 billion Swedish kronor ($636 million), considerably exceeding the average analyst estimate of 5 billion kronor. The company's adjusted gross margin also outperformed expectations, coming in at 48.5% for the quarter, compared to the anticipated 45.9%. This robust performance was attributed to increased sales of more profitable products in higher-margin markets, as well as improved supply-chain efficiencies and cost-reduction measures.

However, Ericsson cautioned that upcoming U.S. import tariffs could have a slight negative impact on margins in the second quarter. Despite this warning, the company remains optimistic about its position in the evolving global trade landscape, citing its well-diversified production capabilities and flexibility to adapt to changing conditions. Ericsson's strong start to the year has boosted investor confidence in its ability to navigate the complex telecom equipment market and maintain its technology leadership in 5G and programmable networks.