Nokia’s AI Business Doubles to €446 Million, Yet a Cash Squeeze Sends Shares Tumbling
Published on 07/26/2026 at 12:22 | Redaktion boerse-global.de
The disconnect between Nokia’s operational momentum and its stock price has rarely been starker. On Friday, the Finnish telecom equipment maker delivered second-quarter results that beat analyst forecasts on both earnings and orders, yet investors responded by driving the shares down 6.32 percent to €8.06 — a level not seen since April. The sell-off extended a brutal 30-day stretch that has wiped more than a third from the stock’s value since it hit a 52-week high of €14.97 in early June.
The headline numbers told a story of accelerating growth. Earnings per share came in at $0.08, a penny ahead of the $0.07 consensus, while revenue climbed 8.4 percent year-on-year to $5.50 billion. On a comparable basis, net sales rose 9 percent and gross margin improved by 70 basis points to 46 percent. The engine of that expansion is unmistakable: Nokia’s AI & Cloud division doubled its revenue to €446 million, and the company’s total order intake reached €2.8 billion — roughly half of which management expects to convert into revenue within twelve months.
Yet the market’s gaze has shifted from the top line to the cash flow statement, and the picture there is far less flattering. Free cash flow swung to negative €732 million, the weakest quarterly showing in that metric for some time, even as Nokia maintained a solid net cash position of €2.8 billion. The cash drain, combined with rising restructuring costs, has punctured the euphoria that surrounded Nokia’s pivot to AI-integrated infrastructure. Investors who had bid the stock up on promise are now demanding proof of profitable execution.
Should investors sell immediately? Or is it worth buying Nokia?
The technical damage is significant. Nokia’s relative strength index has fallen to 29.5, a level that typically signals an oversold condition and often precedes a short-term bounce. But the chart pattern tells a more worrying story: the stock is trading just 2.84 percent above its 200-day moving average of €7.84. That line represents the last line of defence for the bull case. A break below it would open the path toward the 52-week low of €3.45, turning what has been a correction into something far more serious.
Analysts, for now, remain largely undeterred. Bank of America raised its price target to $18.50 with a buy rating, while SEB Equities upgraded the stock to “Buy” with a €12 target. Of the 18 analysts covering Nokia, 13 recommend buying, three say hold, and two advise selling. The consensus price target stands at $12.57, and a discounted cash flow model from Simply Wall St puts fair value at $12.34 — a 26 percent premium to Friday’s close. The valuation picture is mixed: Nokia’s price-to-earnings ratio of 65.6 is roughly double the industry average of 32.2, though still below the peer group mean of 82.1. A return on equity of just 3.3 percent tempers some of the AI narrative’s enthusiasm.
Institutional investors are sending conflicting signals. Sei Investments trimmed its Nokia stake by 6.8 percent in the first quarter, leaving it with 6.18 million shares worth $49.67 million. Others saw opportunity: Kathmere Capital Management boosted its position by 14 percent, Xponance by 13 percent, and Assetmark by just over 12 percent. Collectively, institutions hold about 5.28 percent of the company — a modest figure that underscores how the stock remains a battleground between believers and sceptics.
The fundamental tension is clear. Nokia is executing well in a high-growth market, with its first commercial AI-RAN platform now launched, a pilot project slated for late 2026, and commercial rollout expected in 2027. The company is targeting efficiency gains of more than 100 percent in spectrum usage by 2028. But the transition is expensive, the order book is lumpy, and in a market where Nokia’s annualised volatility has climbed to 66.88 percent, patience is in short supply. The next few sessions will test whether the 200-day moving average holds — and with it, the credibility of the AI infrastructure story that has driven Nokia’s remarkable, if turbulent, year.
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