Nokia's Credit Outlook Brightens, Yet the Share Price Tells a More Cautious Story

Nokia shares near 200-day MA after 30% pullback, but S&P's positive outlook and AI order surge signal long-term strength.

Nokia finds itself in an unusual position: the fundamentals are pointing one way, the chart another. The Finnish telecom equipment maker has just secured a vote of confidence from one of the world's major rating agencies, backed by a surge in artificial intelligence-related orders — but investors who bought at the June peak are nursing losses of nearly a third.

The stock closed Friday at €7.97, hovering just 0.50 percent above its 200-day moving average of €7.93. That technical level, which often serves as a barometer for the long-term trend, has become a floor after a brutal correction that erased almost 30 percent of the share price over the past month. The pullback comes after the stock touched a 52-week high of €14.97 in early June. Despite the recent slide, the shares remain 122 percent higher than they were a year ago and have gained 42 percent since the start of 2025.

S&P Signals a Potential Upgrade

On July 30, S&P Global Ratings revised its outlook on Nokia from "stable" to "positive" while affirming the company's BBB- issuer credit rating. The agency cited Nokia's strengthened position to capitalize on accelerating demand from the AI and cloud sectors, noting that growth in the network infrastructure segment is improving revenue visibility for the years ahead. S&P indicated that a one-notch upgrade within the next 24 months is possible, provided Nokia keeps costs under control and continues executing its pivot toward AI infrastructure.

The timing of the rating action was notable — it landed on the same day Nokia prevailed in a German legal dispute. The Federal Court of Justice dismissed an appeal by Mala, a company that had accused Nokia of patent infringement related to LAN switches. The ruling also cleared parallel infringement proceedings in Düsseldorf.

AI Orders Fill the Gap Left by Telecoms

The credit upgrade follows a quarter that delivered a mixed bag. Nokia reported AI-related order intake of €2.8 billion for the second quarter, while net sales to AI and cloud customers jumped 105 percent year over year. Overall quarterly revenue reached €4.82 billion, up 9 percent on a currency-adjusted basis, with comparable earnings per share of €0.07 beating the consensus estimate of €0.05.

That momentum in high-performance networking equipment is helping offset weakness in the traditional mobile networks business, where carriers have slowed their 5G rollout spending. The shift in revenue mix toward network infrastructure is part of a deliberate strategy to reduce dependence on the cyclical telecom market.

Nokia has also been reshaping its portfolio. The Fixed Wireless Access CPE and Enterprise Campus Edge divisions have been reclassified as discontinued operations since the second quarter, with the sale of the FWA-CPE unit already agreed. Management adjusted its full-year operating profit guidance to a range of €2.1 billion to €2.6 billion, a technical change driven by that reclassification. The company reaffirmed its outlook for 2026.

A Technical Picture That's Oversold, But Stabilizing

The relative strength index sits at 33.8, approaching oversold territory — a zone that has historically attracted buyers, particularly when a fundamental growth story is in place. Bank of America has reiterated its buy recommendation, and Deutsche Bank also maintains a "Buy" rating.

Nokia's partnership with Taiwan Mobile, expanded in July, exemplifies the AI-driven strategy. The project involves building an AI-native 5G network using the AirScale portfolio and AI-powered software designed to boost automation and energy efficiency in network operations.

The question now is whether the swelling AI order book translates into faster revenue recognition and cash collection in the second half of the year. The next test comes on October 22, when Nokia reports third-quarter results — the market will be watching closely to see whether the AI momentum can sustain the stock above its critical technical support.