Nokia's Balancing Act: AI Ambitions Grow While Investors Weigh Restructuring Costs

Nokia buys Arizona chip plant, partners with Nvidia for Southeast Asia AI data centers, and faces restructuring costs amid mixed earnings.

The Finnish telecom equipment maker is moving on multiple fronts at once — buying a semiconductor plant in Arizona, launching a Southeast Asian data-center platform with Nvidia, and quietly transferring nearly a million shares to its workforce — all while the market digests a mixed earnings picture that has left the stock well off its summer peak.

From Gallium Nitride to Indium Phosphide

Nokia has signed a definitive agreement to acquire NXP Semiconductors' manufacturing facility in Chandler, Arizona. The plant, which NXP opened in September 2020 and most recently used for gallium nitride components in the high-frequency segment, was slated for closure in 2027. Under the new arrangement, Nokia will initially lease production capacity in parts of the facility starting in early 2027, with the full acquisition expected to close in the first quarter of 2029.

The site will be converted to produce indium phosphide chips for optical data transmission — a critical component for the data links powering AI data centers. The move underscores Nokia's commitment to securing its own supply chain for optical chip technology, even as the company trims its overall capital expenditure plans for the year.

Zankore: A Gigawatt Bet on Southeast Asia

The Arizona deal came just a day after Nokia, alongside Indosat Ooredoo Hutchison, the Ooredoo Group, and Nvidia, unveiled "Zankore by Indosat," a platform designed to deliver up to one gigawatt of computing capacity across Southeast Asia using Nvidia's DSX-AI-factory technology. The Ooredoo Group is the founding investor with a 49 percent stake, committing an initial $800 million over the next five years. Nvidia will supply the computing hardware, software, and graphics chips, while Nokia contributes its AI-native networking technology.

Both initiatives target the same growth area: network infrastructure for the AI boom. The timing is no coincidence — Nokia's order intake in the AI and cloud segment reached €2.8 billion in the second quarter, with segment revenues more than doubling year over year. Management expects roughly half of those orders to convert into revenue within twelve months.

The Cost of Transformation

The strategic push comes with visible financial friction. While second-quarter net sales rose 9 percent and the operating margin improved by 70 basis points to 9 percent, Nokia posted an operating loss of €50 million under US GAAP — the result of €390 million in restructuring charges during the quarter alone. For the full year, the company anticipates €800 million in costs from accelerated restructuring measures, plus €350 million for integrating its China business, a process slated for completion within two years.

Capital expenditure guidance for the current year has been trimmed to a range of €800 million to €900 million. Nokia attributes the reduction primarily to revised real estate plans rather than any retreat from growth areas — a point reinforced by the Arizona investment. For the third quarter, management projects sales growth of 3 to 7 percent quarter over quarter with broadly stable margins, with the more substantial earnings improvement expected in the fourth quarter.

Insider Buying vs. Analyst Caution

Against this backdrop, several Nokia executives have been putting their own money into the stock. Senior manager Patrik Hammarén acquired 43,293 shares at a volume-weighted average price of €8.4420 on the XHEL trading venue. Board member Timo Ihamuotila purchased more than 40,000 shares across multiple venues at prices between €8.44 and €8.46. Kristen Pressner and Mikko Hautala followed days later, buying at €7.8402 per share.

The cluster of insider purchases within a short window suggests parts of management view the post-earnings share price as an attractive entry point, even as the broader market remains cautious.

Not all sell-side voices share that confidence. Deutsche Bank cut its price target for Nokia on July 27 to €11.50 from €13.50, though it maintained a Buy rating. Barclays, which downgraded the stock to Sell on July 25, remains the most bearish among the houses tracked.

Shares, Sentiment, and the Long View

The share price itself tells a story of volatility. On Friday, Nokia closed at €8.15, down 1.09 percent on the day. Over the past 30 days, the stock has lost nearly 22 percent, and it now sits 45.56 percent below its 52-week high of €14.97, reached on June 3. Still, the shares remain up 45.80 percent year to date — a reminder that the broader upward trend of 2025 remains intact despite the recent turbulence.

In a separate but related development, Nokia transferred 957,142 treasury shares to participants in its employee share plans on Friday, at no cost to the recipients. The company now holds 87,626,482 of its own shares. Such transfers are a routine part of Nokia's employee compensation structure and do not involve fresh capital, though they reduce the company's holdings of its own stock.

The picture for investors is layered. Management is signaling confidence through both insider purchases and strategic investments in AI infrastructure, while the market weighs restructuring costs, a lowered capex outlook, and mixed analyst sentiment. The employee share transfer, while neutral in itself, underscores that Nokia continues to run its compensation programs as usual even as it navigates a period of significant operational change.