Nokia's AI Order Book Is Growing — So Why Is the Stock Still Stuck in the Mud?

Nokia's AI order pipeline and raised guidance clash with costly China retreat, leaving shares down despite analyst upgrades.

The disconnect is hard to miss. Nokia's order pipeline is swelling with artificial intelligence and cloud contracts, two of Wall Street's biggest banks have just raised their price targets, and management has lifted its profit guidance. Yet the share price keeps sliding, leaving investors to weigh a bullish long-term story against the immediate drag of a costly China retreat.

At the center of the optimism is a fresh wave of AI-related orders worth €2.8 billion, roughly half of which is expected to convert into revenue within the next twelve months. The figure caught analysts off guard when it landed with Nokia's second-quarter results on July 23, and it has since triggered a flurry of target-price revisions. Bank of America reaffirmed its buy recommendation on August 12 and lifted its target to $18.50, while SEB Equities upgraded the stock to buy the same day with a €12 target. JPMorgan has gone further still, naming Nokia a top pick with an overweight rating and a $21 price objective — more than double the current share price.

The underlying numbers give the bulls something to work with. Second-quarter earnings per share came in at €0.07, up from €0.04 a year earlier, on revenue of €4.82 billion. AI and cloud sales more than doubled, prompting Nokia to raise its 2026 operating profit forecast to a range of €2.1 billion to €2.6 billion while trimming planned capital expenditure to €800–900 million. Management has guided for sequential revenue growth of 3 to 7 percent in the third quarter, with earnings expected to remain flat before picking up again in the fourth.

JPMorgan's thesis rests on the conviction that the market has been too slow to price in what the order book implies for 2027 and 2028. The bank also points to Nokia gaining share in internet protocol networking and argues the company can scale its component supply chains to ramp production meaningfully over that period.

The counterweight to all that enthusiasm is a restructuring program that keeps getting more expensive. Nokia booked €390 million in restructuring charges in the second quarter alone and now expects €800 million for the full year. A sizable chunk — around €350 million — relates to the company's ongoing withdrawal from China, which includes the closure of its research center in Hangzhou and further job cuts and site shutdowns before year-end. The strategy calls for higher R&D spending outside China and leaner global operations to compensate for the loss of local scale, with growth in AI and optical networks expected to fill the gap.

The market's response has been tepid at best. Shares were trading around €8.73–8.74, roughly 12 percent below the 50-day average of €9.94. The stock lost 5.8 percent over the past week and 7.3 percent over the past month, according to the most recent figures — a pullback that stands in sharp contrast to the analyst upgrades of mid-August. Options markets reflect the same ambivalence, with traders split on how quickly the AI pipeline will translate into reported profits while restructuring costs weigh on near-term results.

Nokia has also reclassified its fixed wireless access CPE business and its enterprise campus edge unit as discontinued operations. The CPE division is slated to go to Inseego, while a sale of the campus edge business looks increasingly likely. The board declared a dividend of €0.04 per share on July 23.

For all the recent weakness, the longer-term picture remains striking. The stock is still up 56 percent since the start of the year and has more than doubled over the past twelve months, even as it sits roughly 42 percent below its 52-week high of €14.97 from June.

Whether the Wall Street thesis wins out ultimately hinges on two questions: how quickly the AI and cloud backlog turns into recognized revenue, and whether the savings from the China overhaul can offset the restructuring costs still ahead. For now, the gap between Nokia's operational story and its share price is exactly the opening JPMorgan and its peers are trying to exploit.