Xerox and Zebra Technologies: Navigating Market Overreactions to Unlock Long-Term Value

The recent selloff in Xerox (XRX) and Zebra Technologies (ZBRA) shares has been driven by a confluence of macroeconomic anxieties and sector-specific headwinds. However, a closer examination of their fundamentals and industry dynamics suggests that the market's pessimism may be overblown, presenting early-stage opportunities for investors willing to look beyond short-term volatility.

The Catalyst: Trade Tensions and Sector Vulnerabilities

The sharp decline in both stocks in October 2025-XRX down 5% and ZBRA down 4.9%-was precipitated by President Trump's warning of "massive increase in tariffs" on Chinese imports, reigniting fears of a trade war, according to Zebra statistics. This triggered a 1.7% drop in the Nasdaq Composite, as tech and industrial stocks faced broad-based selling, the same source noted. For Xerox, the decline exacerbated an already challenging trajectory: its share price has fallen 60.2% year-to-date, trading at $3.29, or 70.3% below its 52-week high, per that StockAnalysis page. Zebra, while better positioned, also faced pressure amid broader market jitters.

Yet, these moves reflect overreactions. The AIDC (Automatic Identification & Data Capture) industry, where Zebra operates, is projected to grow at a 12.57% CAGR through 2032, driven by IoT, AI, and RFID adoption, according to an AIDC market report. Meanwhile, Xerox's pivot to IT solutions-bolstered by its $400 million acquisition of ITSavvy and $1.5 billion purchase of Lexmark-positions it to capitalize on a sector where IT revenue has more than doubled year-over-year, as shown in the Xerox Q1 slides.

Fundamental Valuation: Contrasting Trajectories

Zebra Technologies' financials underscore its resilience. With a trailing P/E ratio of 26.54 and a forward P/E of 17.40, the stock is trading at a discount relative to its growth prospects, as those Zebra statistics indicate. Analysts have set a $364.75 price target (30.21% upside from current levels), supported by a 15.87% return on equity (ROE) and 8.70% return on invested capital (ROIC), per the same Zebra statistics. Its debt-to-equity ratio of 0.59, while slightly above the AIDC industry average of 0.43, remains manageable, the AIDC market report notes.

Xerox, by contrast, faces more daunting challenges. Its Q1 2025 results revealed a 3.0% revenue decline and a 1.5% adjusted operating margin, reflecting struggles in its core print business, as shown in the Xerox Q1 slides. However, the company's strategic reinvention plan-targeting $700 million in cost synergies and a projected 5.0% adjusted operating margin for 2025-signals a path to stabilization, as detailed in a PrintIndustry article. While XRX's debt-to-equity ratio of 5.46 is concerning, according to an XRX PE ratio analysis, its IT Solutions segment grew 121.6% year-over-year, driven by acquisitions, as noted in the Xerox Q1 slides.

Sector Trends: AIDC's Growth Engine vs. Print's Digital Transformation

The AIDC industry is a standout growth story. By 2030, the market is forecasted to reach $136.6 billion, fueled by digital transformation, supply chain automation, and RFID adoption in retail and logistics, as discussed in the Xerox Q1 slides. Zebra's Q1 2025 revenue of $1.3 billion (up 12% YoY) and 18% growth in its Automated Identification & Data Capture segment highlight its leadership in this expansion.

For Xerox, the print/IT solutions sector is more fragmented. While the print segment faces declining volumes and tariff pressures, IT Solutions revenue has surged, reflecting demand for cloud infrastructure and AI-driven document processing, according to the Xerox Q1 slides. Quocirca's 2025 Cloud Print Services Landscape recognizes Xerox as a leader in this space, underscoring its strategic investments in cloud and AI-assisted services, as noted in the Xerox Q1 slides.

Is the Selloff a Buying Opportunity?

The current pullback in XRX and ZBRA appears to reflect overwrought fears of a trade war and sector-specific challenges. For Zebra, the stock's valuation metrics and industry tailwinds suggest a compelling entry point for long-term investors. Its strong ROE, analyst price targets, and alignment with high-growth AIDC trends justify a "Buy" rating, per the Zebra statistics.

Xerox's case is more nuanced. While its print business remains under pressure, the company's IT Solutions segment and strategic acquisitions offer a clear path to growth. At $3.29, XRX trades at a significant discount to its 52-week high, and its projected low single-digit revenue growth for 2025-supported by cost synergies and Lexmark integration-could drive a rebound, as noted in the PrintIndustry article. However, investors must weigh the risks of its high debt load and print sector headwinds.

Conclusion

The recent selloff in Xerox and Zebra Technologies has created asymmetric opportunities. Zebra, with its strong fundamentals and alignment with a high-growth industry, offers a clearer path to long-term value. Xerox, while riskier, presents a speculative bet on its ability to execute its reinvention strategy. For investors with a multi-year horizon, both stocks warrant closer scrutiny-but Zebra's robust financials and sector momentum make it the more compelling choice.