Nokia's Restructuring Bill Climbs to €800 Million Even as AI Orders Double

Nokia wins big AI contracts and raises profit outlook, but restructuring costs and a trimmed price target keep shares below key moving average.

The optics are hard to reconcile. Nokia keeps winning bigger AI contracts, lifting its profit outlook, and yet the share price sits roughly 22 percent below its 50-day moving average. The disconnect has less to do with the Finnish network equipment maker's operational trajectory than with the cost of getting there — and the market's shifting patience for a transformation that is now accelerating on multiple fronts.

Deutsche Bank trimmed its price target on Nokia to €11.50 from €13.50 on July 27, while maintaining a buy rating. The adjustment came just days after the company's second-quarter report, in which Nokia raised its full-year profit guidance. The bank's message was nuanced: the business is performing, but after the stock's recent run, the upside looks more contained.

AI momentum meets a heavier cost burden

The numbers behind the optimism are substantial. On July 23, Nokia reported comparable earnings per share of €0.07 for the second quarter, up from €0.04 a year earlier, with revenue climbing 9 percent to €4.82 billion. Order intake in the AI and cloud segment reached €2.8 billion — more than double the prior-year figure. CEO Justin Hotard pointed to broad strength across Optical Networks and IP Networks, noting that roughly half of those orders should convert into revenue within twelve months.

That momentum prompted Nokia to lift its 2026 comparable operating profit forecast to €2.1–2.6 billion, up from a prior range of €2.0–2.5 billion.

But the growth story carries a price tag. Nokia now expects restructuring costs of around €800 million for 2026, up from earlier estimates. On top of that sit €350 million in integration costs tied to Nokia Shanghai Bell, the Chinese joint venture Nokia is folding in-house. The integration timeline has been compressed to two years from the originally planned two to three. Additional restructuring programs, primarily in Europe, will add another €200 million next year.

The company also trimmed its capital expenditure guidance for the full year to €800–900 million, down from a previous range of €900 million to €1 billion — a signal of disciplined capital allocation during the transition.

Portfolio pruning accelerates

Nokia has formally reclassified two business lines as discontinued operations: its Fixed Wireless Access CPE unit and the Enterprise Campus Edge business. The CPE sale to Inseego was agreed in late April, with Nokia set to receive roughly 7 percent of Inseego's shares plus warrants valued at $20 million. After a further $10 million investment at closing, that stake is expected to rise to about 11 percent. A deal for the Enterprise Campus Edge unit is considered highly likely.

The rationale for the divestitures is visible in the segment data. Fixed Networks revenue fell 13 percent as telecom operators trimmed infrastructure spending, while Network Infrastructure grew 12 percent, powered by optical and IP networking demand from hyperscalers building AI data centers. Nokia is effectively doubling down on the businesses that are working while shedding the ones that aren't.

A market caught between two narratives

The stock's recent behavior tells a more complicated story. At the time of the Deutsche Bank adjustment, Nokia shares had come under pressure — not because of company-specific news, but largely due to disappointing results from rival Ericsson, which warned about rising memory chip prices driven by AI demand and stoked concerns about supply chain costs across the sector.

The technical picture reflects the cooling. The share price, trading around €8.26–8.29 on Monday with a gain of roughly 1.3–1.7 percent on the day, sits well below its 50-day average of about €10.59 — a gap of more than 21 percent. The 200-day average of €8.04, however, is only marginally above the current price, suggesting the strong rally of recent months has largely unwound. The relative strength index near 40 points to weak but not oversold momentum.

For the third quarter, Nokia guides to net sales growth of just 3–7 percent quarter-on-quarter with flat earnings, pushing the more meaningful profit improvement into the fourth quarter. Hotard said the company enters the second half "with momentum" and remains on track to land slightly above the midpoint of its annual comparable operating profit guidance.

The market's core question is straightforward: can the high-margin AI and cloud business compensate for weakness in traditional telecom segments and the added restructuring burden? The fourth quarter, when the earnings inflection is expected, will provide the first real answer.