Nokia’s €2.8 Billion AI Order Haul Can’t Mask the Cash Burn — Or the 28% Rout

Nokia's Q2 profit beat and AI cloud revenue doubling fail to lift stock, as market focuses on cash flow woes and unchanged guidance amid tech sell-off.

The numbers coming out of Nokia are a study in contradiction. The Finnish network equipment maker posted an operating profit of €434 million on July 28 — well ahead of the €382 million analysts had penciled in. Revenue climbed 9% year-on-year, the AI and cloud segment more than doubled, and the order book swelled to a staggering €2.8 billion. Yet the stock has been hammered, shedding 28.41% over the past month and closing Monday at €8.14, nearly half its June peak of €14.97.

What looks like a crash is something more nuanced: a red-hot rally cooling off, a sector-wide tech sell-off, and a market that wants proof — not promises — that Nokia can turn its order backlog into cash.

The AI Boom That Markets Are Refusing to Celebrate

Nokia’s AI and cloud unit was the standout performer in the second quarter. Net revenue surged 105% to €446 million, propelled by the Nvidia partnership and the company’s push into data center infrastructure. The order intake hit €2.8 billion, roughly 6.3 times the segment’s quarterly sales, with about half expected to convert into revenue over the next twelve months.

That should be a headline-grabbing number. Instead, the market focused on what it didn’t hear: Nokia merely reaffirmed its full-year guidance for operating profit of €2.1 billion to €2.6 billion, without raising the bar for the AI segment. For a stock that had more than doubled over the past twelve months — still up 121% year-on-year — a steady-as-she-goes outlook felt like a letdown.

The broader tech rout didn’t help. A wave of selling swept through Asian and US technology stocks, fueled by concerns over the capital intensity of AI spending and rising competition from Chinese memory chip makers like CXMT. Nokia’s annualized volatility of 66.5% left it particularly exposed to the sector’s mood swings.

The Cash Conundrum

The real tension lies beneath the top-line growth. Nokia reported a net loss of €50 million for the quarter and negative free cash flow of €732 million. Restructuring costs of €390 million — tied to the company’s ongoing transformation — are weighing on the balance sheet and could keep cash flow in the red for several more quarters.

The question investors are wrestling with is straightforward: Can Nokia convert its fat order book into actual cash quickly enough to decouple from the sector’s jitters? The CEO has pointed to supply chain bottlenecks as the main constraint on order fulfillment. If those ease, the path to revenue realization — and healthier margins — becomes clearer. If not, the paper backlog risks looking like a liability rather than an asset.

Chart Support Holds — For Now

Technically, Nokia is walking a tightrope. The stock has blown through its 50-day moving average of €11.49 and is now clinging to the 200-day average at €7.86 — just 3.6% above it. The relative strength index at 30.6 is deep in oversold territory, suggesting the selling pressure may be exhausted in the near term.

A break below the 200-day line would open the door to a much deeper correction, potentially toward the year’s low of €3.45 if the tech panic intensifies. But as long as that long-term trend holds, the move looks more like a sharp, sentiment-driven purge than a structural breakdown. The stock has already given back nearly half its value from the June high — a classic pattern for an overextended rally that needed to digest gains.

Insider Confidence

One signal worth watching: a company insider recently purchased 165,293 Nokia shares. That kind of vote of confidence from inside the boardroom doesn’t guarantee a turnaround, but it adds a data point that market watchers will be monitoring for repeats in the weeks ahead.

The Bottom Line

Nokia is caught in a tug-of-war between operational momentum and market skepticism. The AI order book is real, the revenue growth is accelerating, and the long-term trend line is still intact. But the cash burn, the restructuring drag, and the sector-wide volatility are keeping a lid on the stock.

The next test comes in the second half of the year. If Nokia can stabilize its cash flow and start converting those €2.8 billion in orders into earnings, the current sell-off may look like a buying opportunity. If the cash drain persists and the 200-day average breaks, the pain could have further to run. For now, the structural argument behind Nokia’s reinvention as an AI infrastructure play remains intact — but the market is demanding proof, not projections.