Nokia's AI Order Book Is Booming, but the Field Test in Japan Will Decide the Story

Nokia's shares climbed 2.8% on Friday, with media reports pointing to analyst upgrades as the trigger for the rebound. Handelsbanken and OP Corporate Bank both moved to Buy, each citing a price target of €10. The recovery reflects a reassessment of recent news rather than any fresh corporate announcement — and it does not resolve the concerns about cash generation and higher restructuring charges that followed the quarterly report.

That distinction matters. A buy rating can arrive alongside more cautious valuation assumptions, as Rosenblatt demonstrated: the firm kept its Buy recommendation but trimmed its price target from $15 to $14, citing lower valuation multiples among comparable companies. Friday's advance is best read as a correction of what some saw as an exaggerated sell-off, not a blanket all-clear.

A Field Trial With a Date Attached

The more substantive test sits elsewhere. On Tuesday, Nokia and SoftBank agreed a commercial AI-RAN field trial in Japan for 2027, in which Nokia's anyRAN software will run on SoftBank's AITRAS platform alongside NVIDIA's Aerial RAN Computer. The significance lies less in the roster of systems involved than in the shared deployment under real-world conditions.

The agreement points in a clear direction: AI is meant to become part of network operations, not a layer sitting beside them. For investors, that is the gap between an appealing technology narrative and a verifiable business proposition. A scheduled field trial is a step along that road, not proof of broad commercial success.

Nokia had already widened its collaboration with NVIDIA on Wednesday, covering AI functions in radio processing and a sovereign platform for AI agents in network operations. According to the company, Elisa has already run voice, mobile data and video analytics simultaneously on that platform in its live mobile network. That goes beyond concept work — though a successful deployment of specific applications does not yet answer the question of future revenue contribution.

The Numbers Behind the Narrative

Thursday's results gave that perspective an economic foundation. Revenue from AI and cloud customers grew 123%, while order intake in the segment rose 118%. Comparable operating profit climbed 35% to €605 million, with the corresponding margin at 11.7%. Third-quarter revenue came in at €5,154 million.

It would be too simple to attribute that growth directly to the announced network projects. The figures cover the AI and cloud customer business; the SoftBank trial has its own timeline. Both belong to Nokia's AI development, but they are not the same thing.

The investment case therefore does not rest on future hopes alone — Nokia already reports improved operating profitability. Which is precisely why a clean separation is warranted: the existing business is delivering results, while the new applications have yet to prove their additional economic value.

Where the Cash Question Bites

Against the stronger operating picture stands a weaker outlook on converting profit into free cash flow. Nokia confirmed its 2026 comparable operating profit guidance of €2.1 billion to €2.6 billion on Thursday, but cut its assumption for free cash flow conversion to 35%–55%. Higher restructuring charges were among the worries that followed the numbers.

That contrast explains the divergent readings of the report. Revenue and profit growth speak to business momentum; the financial assessment also hinges on how much free cash actually materializes. The unchanged profit forecast does not offset the more cautious cash flow guidance, and the rebound does not answer these points — it merely shows their weight being judged less negatively.

Two levels therefore remain decisive for how the stock is valued: the technical and commercial development of the business, and the ability to turn operating profit into free funds. Analyst upgrades support the valuation. The proof has to come from the business itself — and the practical trials now on the calendar are where that proof will first be tested.