Nokia's China Exit Accelerates as Analysts Bet on AI-Driven Turnaround

Nokia plans to close most mainland China operations by 2026 amid Huawei/ZTE dominance, while AI networking orders fuel bullish analyst targets.

The numbers tell a stark story of retreat. Nokia employed 13,700 people in Greater China in 2020; by the end of 2025, that figure had dwindled to roughly 7,200. Regional revenue has collapsed from €2.2 billion in 2018 to just €913 million last year. Now the Finnish network equipment maker is preparing to close nearly all of its mainland operations by the end of 2026, a move that would effectively sever a once-thriving business from a market dominated by domestic champions Huawei and ZTE.

The Hangzhou research center is first in line, with around 1,600 positions slated for elimination. Only after-sales service is expected to remain in the country. Nokia points to persistent competitive pressure and a business in structural decline, but CEO Tommi Uitto has also acknowledged a geopolitical dimension: Chinese authorities, citing national security concerns, have increasingly shut Western vendors out of the market. Together with Ericsson, Samsung, and Nokia itself, Huawei and ZTE control roughly 96% of the global RAN market — leaving little room for foreign players on Chinese soil.

A Tale of Two Reactions

Markets have responded with visible unease. When the South China Morning Post first reported the Hangzhou closure on Tuesday, shares slid between 3.4% and 4.0% in pre-market and regular trading. The weakness extended into Wednesday, with the stock changing hands at €8.81, down 2.3% from Tuesday's close of €9.02. One automated screener service downgraded the stock from "hold" to "sell" following the daily loss — though such signals carry limited weight amid a fundamentally driven news cycle.

Yet the picture looks markedly different elsewhere. JPMorgan analyst Sandeep Deshpande reaffirmed an "Overweight" rating on Wednesday, calling Nokia a top pick and arguing that consensus estimates fail to capture how strongly the order book supports earnings projections for 2027 and 2028. The bank's price target stands at €18 for the Helsinki listing, with a more ambitious $21 target for the US-listed shares. Bank of America Global Research lifted its target to $18.50 on August 12, while SEB Equities upgraded the stock from "hold" to "buy" with a €12 target — both citing robust order momentum in AI networking as a potential catalyst for re-rating.

The AI Counterweight

Away from China, Nokia is repositioning itself for the artificial intelligence boom. In early August, the company signed an agreement to acquire NXP Semiconductors' Chandler semiconductor plant in Arizona, intending to convert the facility to produce indium-phosphide chips for optical applications — a segment poised to benefit from surging demand in AI data centers. Nokia has also launched what it calls the first commercial AI-RAN platform in partnership with Nvidia, claiming a 20% improvement in spectral efficiency for mobile networks.

The strategic pivot extends to the balance sheet. On August 13, Nokia trimmed its 2026 guidance for comparable operating profit to a range of €2.1–€2.6 billion, down from €2.2–€2.7 billion, citing the discontinuation of its Fixed Wireless Access CPE and Enterprise Campus Edge divisions. The full-year outlook remains unchanged. Second-quarter revenue came in at €4.82 billion, up 8.3% year-on-year, propelled by a doubling of net sales in the AI and cloud segment.

A Volatile Middle Ground

The stock's trajectory reflects the tension between these competing narratives. Year-to-date, shares have gained 58%, and over twelve months they stand 143% higher — yet they remain 41% below the 52-week high of €14.97 reached in early June. The annualized 30-day volatility of 68% underscores just how sharply the China headlines and the AI growth story are pulling the stock in opposite directions.

Technical indicators offer a similarly mixed read. The shares trade roughly 8.9% below their 50-day moving average of €10.02, suggesting short-term weakness, while comfortably clearing the 200-day average of €8.16. Institutional conviction, meanwhile, appears to be building: Bank of America increased its Nokia stake by 105.2% in the first quarter, to just over 2.4 million shares.

Industry recognition adds another layer of support. Omdia's "Market Landscape: Core Vendors" report for 2026 named Nokia the top-ranked vendor among twelve assessed providers for the second consecutive year, leading in all seven categories from cloud-native maturity to AI and machine-learning capabilities. Nokia also points to the world's first commercial 5G core solution delivered as software-as-a-service.

The picture that emerges is of a company in transition — shedding a legacy market that has become both commercially and politically untenable, while placing increasingly large bets on the infrastructure that will power the next wave of computing. For investors, the question is whether the China exit represents a necessary cost of that transformation or a sign of deeper erosion. The analysts covering the stock have largely made their choice; the market, with its 68% volatility, has not.