Nokia's AI Ambitions Clash With a Shrinking China Footprint
Published on 08/21/2026 at 14:01 | Redaktion boerse-global.de
The Finnish telecom equipment maker is executing a delicate balancing act: retreating from one of its oldest markets while repositioning itself at the center of the artificial intelligence boom. The latest evidence of that strategic pivot came this week with the launch of a commercial AI-RAN platform developed jointly with Nvidia, a system designed to boost mobile network capacity and offer carriers a software-based pathway toward 6G through a subscription model.
The Nvidia partnership is just one piece of a broader narrative that has analysts divided over Nokia's trajectory. The company's second-quarter results, released in late July, showed revenue climbing to EUR 4.82 billion from EUR 4.44 billion a year earlier, fueled by EUR 2.8 billion in AI and cloud orders — a segment that more than doubled its sales. Earnings per share improved to EUR 0.07 from EUR 0.04, prompting management to lift its full-year comparable operating profit guidance to EUR 2.1–2.6 billion while trimming planned capital expenditure to EUR 800–900 million.
That combination of higher profit expectations and tighter capital discipline has been read by some as evidence of improving operational efficiency. The company also accelerated its restructuring program, anticipating charges of EUR 800 million this year, and is in the process of divesting its fixed-wireless-access customer premises equipment business to Inseego, with a sale of its enterprise campus edge unit considered highly likely.
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A Painful Exit From the World's Largest Telecom Market
While the AI story gains momentum, Nokia is simultaneously winding down operations in Greater China. The company confirmed it will close its radio technology research facility in Hangzhou by the end of 2026, eliminating roughly 1,600 jobs. The move is part of a broader retreat from mainland China that touches nearly all of the company's activities there and affects the majority of its approximately 7,200 employees in the region, with sites in Beijing, Shanghai, Chengdu and Qingdao spread across the mobile networks and network infrastructure divisions.
The scale of the decline is stark. Revenue from Greater China has fallen from EUR 2.2 billion in 2018 to EUR 913 million last year — a 58 percent drop that has stripped the region of its strategic importance to the Finnish group. The pullback represents the final chapter of a presence that once made Nokia a dominant force in Chinese telecommunications.
Analysts Split on the AI Story
The market's response to Nokia's transformation has been anything but uniform. JPMorgan reiterated its "Overweight" rating with a USD 21 price target, arguing that investors are too slow to price in Nokia's revenue potential in AI and cloud infrastructure. The bank, which raised its target from USD 14 in June, believes the company's order pipeline points to stronger results in 2027 and 2028 than analysts currently expect, implying upside of more than 100 percent.
SEB Equities upgraded the stock from "Hold" to "Buy" on August 13, citing the EUR 2.8 billion AI and cloud order intake, with a EUR 12.00 price target. On the other side of the fence, AlphaValue/Baader Europe cut its rating to "Reduce" the same day, nudging its price target only marginally higher to EUR 9.48 — a reminder that translating AI strategy into concrete earnings remains an open question.
External validation has come from an unexpected quarter: Omdia's "Market Landscape: Core Vendors – 2026" report ranked Nokia first in all seven categories examined, including cloud-native maturity and AI/ML analytics. Taiwan Mobile also expanded its 5G contract with Nokia in early August, adding AirScale radio modules and AI-powered software aimed at improving network energy efficiency.
Insider Confidence Meets Institutional Caution
Following the post-earnings volatility, Nokia's management executed a cluster of insider purchases at an average price of around EUR 9.09 — a signal of confidence that has not gone unnoticed. Institutional filings, however, paint a more mixed picture. Fidelity cut its Nokia position by roughly 30 percent in a mandatory disclosure, though it still holds more than 155 million ADRs valued at around USD 2.06 billion. Annex Advisory Services also significantly reduced its stake during the second quarter.
A Stock Caught Between Two Narratives
The share price reflects the tension. At EUR 8.88 on Friday, the stock was up 1.4 percent on the day but down 5.1 percent over the past week and 2.2 percent on a monthly basis. That leaves it roughly 41 percent below its 52-week high of EUR 14.97, reached on June 3. Yet the longer-term picture remains firmly positive: the stock is up 59 percent year-to-date, a figure that suggests the market has already rewarded Nokia's strategic pivot even as near-term skepticism persists.
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For the third quarter, management guided to revenue growth of just 3 to 7 percent quarter-over-quarter with flat operating profit, citing the timing of software revenue recognition. That cautious near-term outlook, combined with the painful but strategically coherent exit from China, leaves investors weighing a shrinking legacy business against an AI opportunity that major banks believe is not yet fully reflected in the share price.
