Nokia’s AI Pivot Runs Into a Rough Patch as Stock Drops 7% Despite Cloud and Defense Deals

Nokia shares slide nearly 7% after a flurry of AI and cloud deals, snapping a 12-month rally. Technical resistance and earnings uncertainty weigh on investors.

The market gave Nokia a deafening shrug on Friday. Despite a flurry of strategic announcements spanning Google Cloud’s Gemini AI agents, an expanded AWS relationship, and even a foray into drone defense, the stock skidded nearly 7% to close at €11.44 — just below its 50-day moving average of €11.76. The move snapped a remarkable twelve-month run that has seen the shares more than double, leaving investors to puzzle over whether the selloff is a shallow breather or the start of something deeper.

Strategic Blitz Meets Technical Resistance

The day’s drop pushed Nokia 24% off its June peak of €14.97, a level that now seems distant. The relative strength index settled at 43.6, a zone that indicates neither extreme oversold conditions nor a clear buy signal. What makes the retreat jarring is the sheer density of recent corporate activity.

On the cloud front, Nokia deepened its partnership with Google Cloud by embedding Gemini-based AI agents directly into its Assurance Center platform. The agents are already handling router and event analysis, and a full SaaS launch via the Google Cloud Marketplace is earmarked for September 2026. Separately, the company is working with Amazon Web Services and Databricks to push autonomous network capabilities. A Level-4 autonomy platform for telecom operators is slated for later in 2026.

Nokia also announced a $30 million investment in a semiconductor test facility in Pennsylvania, where it will produce photonic chips for AI data centers. And in a move that underscores its broadening addressable market, the company’s defense unit joined a Finnish border-guard consortium to develop counter-drone systems.

The Financial Backbone

The strategic push rests on a solid foundation. In the first quarter, Nokia reported comparable operating profit of €281 million, up from €183 million a year earlier, on revenue of €4.5 billion. The AI and cloud segment was the standout: revenue surged 49% and order intake hit €1 billion. Optical Networks added 20% growth.

For the full year 2026, management targets comparable operating profit in a range of €2.0 billion to €2.5 billion. The network infrastructure business is expected to grow 12%–14%, while IP and Optical Networks together are forecast to expand 18%–20%.

These numbers explain why analysts have re-rated the stock from a legacy telco supplier to an AI infrastructure play. Yet the market now appears to be demanding proof that the partnerships will produce measurable revenue and earnings — not just headlines.

Catalysts on the Horizon

The next major checkpoint comes at the end of July, when Nokia reports its first-half results. Consensus calls for second-quarter earnings of $0.07 per share. Whether that figure can narrow the gap to the year’s high will depend heavily on how much of the AI-driven order book has converted into recognised sales.

Technical traders will watch whether the stock can reclaim its 50-day average early in the coming week. A failure to do so could extend the pullback, especially given that Nokia still trades 56% above its 200-day moving average — a stretched level that leaves it vulnerable to macro shocks.

Those macro risks are real. The coming days bring the eurozone manufacturing PMI and a June inflation estimate from Eurostat, which stood at 3.2% in May. Any upside surprise could push bond yields higher and compress the growth valuations that have supported Nokia’s rally.

For now, the narrative of Nokia as a reinvigorated AI-telco hybrid remains intact. The stock’s steep drop suggests the market has simply paused to verify the story — not abandoned it.