Nokia's AI Order Boom Collides With a Back-Loaded 2026 That Leaves No Room for Error
Published on 08/03/2026 at 03:01 | Redaktion boerse-global.de
The arithmetic facing Nokia investors is brutally simple — and it explains why a record-breaking quarter for artificial intelligence orders has done nothing to arrest the slide in the share price.
The Finnish network equipment maker closed Friday at €7.93, essentially flat on the day, but that stability masks a brutal stretch. The stock has shed roughly 47 percent from its 52-week high of €14.97, a peak reached only in early June. In the span of 30 days, the shares lost nearly a third of their value, landing almost precisely on the 200-day moving average — a level that has repeatedly acted as support during this year's uptrend.
A Guidance Gap That Demands a Historic Fourth Quarter
The disconnect between the order book and the share price comes down to timing. Nokia's AI and cloud business saw revenue jump 105 percent year over year in the second quarter, with order intake reaching €2.8 billion in that single three-month stretch — more than the segment booked in all of 2025. CEO Justin Hotard expects roughly half of those orders to convert into revenue within the next twelve months, which would provide meaningful tailwinds into the second half of 2026 and beyond.
But the market is focused on a more immediate problem: the full-year guidance. Nokia continues to target comparable operating profit of €2.1 billion to €2.6 billion for 2026, yet the first half delivered just €735 million. Reaching the midpoint of €2.35 billion requires €1.62 billion in the back half of the year. With the company guiding for approximately €434 million in the third quarter, the fourth quarter alone would need to contribute around €1.18 billion — more than the entire first half combined.
That leaves virtually no margin for error in the final stretch of the year. The pressure is compounded by restructuring costs expected to land between €700 million and €800 million for 2026, along with persistent supply constraints and rising memory chip prices that are squeezing margins. The company's cash conversion guidance remains wide at 55 to 75 percent, adding another layer of uncertainty.
A Credit Upgrade Offers a Counterweight
Against that backdrop, the rating agencies have struck a notably different tone. On July 30, S&P Global lifted its credit outlook on Nokia from "stable" to "positive" while affirming the long-term 'BBB-' rating. The agency cited successful business diversification and more stable cash flow prospects, with particular emphasis on the growing demand from AI and cloud customers as a structural advantage that reduces Nokia's historical reliance on the cyclical telecom infrastructure market.
The upgrade provides some balance to the €50 million operating loss Nokia reported in the second quarter under official accounting standards — a figure management attributed to an accelerated restructuring pace. On a comparable basis, operating profit rose 9 percent in the quarter, though reported margins came in at minus 1 percent.
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Analysts Split on the Path Forward
Wall Street's reaction to the numbers has been conspicuously divided. Deutsche Bank cut its price target from €13.50 to €11.50 on July 27 but maintained a "Buy" rating. Bank of America moved in the opposite direction, lifting its target from $18 to $18.50, also with a "Buy" recommendation.
The divergence reflects fundamental disagreement over how quickly the AI demand surge can offset near-term margin pressure. Nokia itself expects third-quarter revenue growth of 3 to 7 percent sequentially, with operating profit roughly flat. The real earnings inflection is slated for the fourth quarter, when software revenue is expected to normalize.
Overbought Conditions Fading, Volatility Elevated
Technical indicators suggest the selling pressure may be losing momentum. The 14-day relative strength index has fallen to 33.3, approaching oversold territory. Meanwhile, the annualized 30-day volatility sits at a lofty 68.44 percent, underscoring just how jittery sentiment has become following the earnings release.
Dividend and Portfolio Reshaping Proceed in Parallel
Shareholders have a payout to look forward to this week: Nokia pays a quarterly dividend of €0.04 per share on Thursday, August 6, part of a total distribution of up to €0.14 per share approved at the annual meeting in April.
Strategically, the company continues to streamline its portfolio. Nokia now classifies its Fixed Wireless Access CPE and Enterprise Campus Edge businesses as discontinued operations, redirecting resources toward growth areas such as Optical Networks and IP Networks.
A Long Game in Arizona
Separate from the quarterly earnings debate, Nokia is advancing its U.S. manufacturing ambitions. The company has agreed to acquire a semiconductor facility in Chandler, Arizona, from NXP Semiconductors, pending regulatory approvals. Nokia will initially lease manufacturing capacity at the site starting in early 2027, before converting the facility to produce optical components for AI data centers. The full acquisition is not expected to close until the first quarter of 2029 — a long-term capacity build rather than a near-term earnings catalyst.
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The Memory Chip Question Looms
The AI and cloud segment now accounts for 9.3 percent of group revenue, having grown 103 percent year over year. But Hotard has cautioned that memory chip shortages are likely to persist, making them the key swing factor for margins heading into next year.
The central question between now and the third-quarter report: whether the order momentum can translate into the concentrated profit delivery the fourth quarter demands. The orders are real, the growth is real — but the stock's fate hinges on whether Nokia can execute the back-loaded year it has promised, without a misstep in a quarter where there is no room for one.
Disclaimer regarding our articles: No investment advice, no buy or sell recommendation. Information on prices, companies, and markets is provided without guarantee; changes are possible at any time. Stock market transactions can lead to substantial losses. Our articles are created and reviewed in whole or in part automatically with the support of AI.
