Nokia's AI Infrastructure Push Gains Momentum, Even as the Share Price Cools Off

Nokia's AI-driven strategy, including Nvidia partnership and Arizona chip plant deal, fails to lift shares, which fell 22% in a month despite strong fundamentals.

The disconnect between Nokia's strategic trajectory and its share price has rarely been wider. Over the past month, the Finnish telecom equipment maker has unveiled a regional AI platform with Nvidia, signed a binding deal to acquire a semiconductor plant in Arizona, and watched its order book swell with AI-related contracts. Yet the stock has shed roughly 22 percent of its value over the same 30-day stretch, closing Friday at EUR 8.15 after a 1.09 percent decline. For the year, the shares remain firmly in positive territory, up 45.80 percent since January 1.

A Regional AI Platform Takes Shape

The latest piece of the puzzle came together this week with the announcement of "Zankore," an AI infrastructure platform developed jointly with Indonesian telecom operator Indosat, the Ooredoo Group, and Nvidia. The platform is designed to scale up to one gigawatt of capacity using Nvidia's DSX AI factory technology, positioning Nokia as a key supplier for the build-out of AI data centers across Southeast Asia. The partnership follows the commercial launch in early August of an AI-RAN platform built on Nvidia technology, which is intended to boost radio network efficiency and pave the way for 6G standards.

Arizona Chip Plant Secures Supply Chain

On Friday, Nokia signed a binding agreement with NXP Semiconductors to acquire the Chandler semiconductor facility in Arizona. The plant will be converted into a production site for optical communication chips based on indium phosphide, a component increasingly critical for AI data centers. The transaction is structured in two phases: Nokia will initially lease manufacturing capacity at the facility starting in early 2027, with the full acquisition expected to close in the first quarter of 2029. The move is designed to reduce Nokia's reliance on external suppliers for a product segment that is gaining strategic importance as AI infrastructure expands.

Analyst Sentiment Turns Bullish

The flurry of announcements has not gone unnoticed on the sell side. Bank of America raised its price target on Nokia to USD 18.50 on Monday, reaffirming its buy recommendation and citing the strong AI-related order intake. SEB Equities upgraded the stock from Hold to Buy the same day, setting a new target of EUR 12.00 and pointing to accelerated growth driven by cloud and AI demand. S&P Global Ratings also chimed in, revising its credit outlook for Nokia from "stable" to "positive" on expectations of improved margins and cash flow as the company pivots toward AI infrastructure.

Solid Fundamentals, Heavy Restructuring Costs

The optimism is grounded in a robust second-quarter performance. Nokia reported net sales of EUR 4.815 billion, up 9 percent at constant currency, with comparable diluted earnings per share of EUR 0.07, a 75 percent improvement year over year. The standout figure was an order intake of EUR 2.8 billion in the AI and cloud segment, underscoring the company's ability to convert AI demand into actual contracts. Comparable operating profit climbed 18 percent to EUR 434 million, though restructuring charges of EUR 390 million pushed the company to an operating loss of EUR 50 million for the quarter.

Management has guided for comparable operating profit of EUR 2.1 to 2.6 billion for the full year, with third-quarter sales growth expected to land between 3 and 7 percent sequentially. The company has signaled that a more substantial earnings contribution will not materialize until the fourth quarter.

Portfolio Reshaping Continues

The restructuring is proceeding on multiple fronts. On July 23, Nokia classified its fixed wireless access (FWA) devices business and its Enterprise Campus Edge operations as discontinued, following an agreement to sell the FWA division to Inseego. The divestiture is part of a broader effort to concentrate on higher-margin growth areas: cloud, AI, and optical networks.

Shareholders have been kept in mind as well. Nokia paid its quarterly dividend on Thursday, with the record date set for late July, and the board retains authorization for distributions of up to EUR 0.06 per share. On Friday, the company transferred 957,142 treasury shares without consideration to participants in its share-based compensation programs, reducing its treasury stock to 87,626,482 shares.

Insider Buying Offers a Vote of Confidence

Executives have been putting their own money behind the strategy. On July 24, board member Timo Ihamuotila purchased 60,000 shares, while executives Patrik Hammarén and Pallavi Mahajan acquired 43,293 and 62,000 shares respectively. A few days later, on July 29, executive Mikko Hautala added 7,103 shares to his holdings. Insider purchases of this kind are often read as a signal of management's conviction in the company's direction.

What to Watch Next

The near-term catalyst calendar is relatively light. Management is scheduled to appear at the dbAccess European TMT Conference in London on September 2, where further details on the AI strategy are expected. The next major milestone comes on October 22, when Nokia publishes its third-quarter and nine-month results.

For now, the market seems to be weighing the long-term promise of the AI infrastructure build-out against the near-term costs of transformation. The stock's proximity to its 200-day moving average of EUR 8.02 suggests the post-rally consolidation may have further to run, but the underlying business momentum — from the Arizona fab to the Zankore platform — tells a story that extends well beyond the current quarter.