Nokia's AI-Fueled Rally Meets a Harsh Reality Check as Costs and Competition Cloud the Picture
Published on 07/18/2026 at 13:03 | Redaktion boerse-global.de
On Friday, Nokia shares closed at EUR 8.89, a 2.1% retreat that capped one of the worst trading weeks for the Finnish network equipment maker in five years. Over the past seven sessions, the stock has shed 18.4%, and the monthly decline now stands at almost 26%. The brutal sell-off has erased a significant chunk of the gains from a rally that had more than doubled the share price over the past twelve months, leaving the year-to-date advance at a still-impressive 59%.
The damage has not been limited to Nokia. A wave of profit-taking has swept through the technology sector, triggered in part by the unveiling of a new low-cost Chinese AI model. On July 17, Moonshot AI introduced its Kimi K3 model, boasting 2.8 trillion parameters and pricing that undercuts offerings from OpenAI and Anthropic. The news rattled investors who have bet heavily on multi-billion-dollar AI infrastructure spending, sending the Philadelphia Semiconductor Index into bear market territory — down roughly 20% from its late-June record high. Adding to the pressure, rival Ericsson delivered disappointing quarterly results and warned of rising costs tied to AI infrastructure, dragging down the entire telecom equipment space.
The price action has left the stock technically oversold. The 14-day relative strength index sits at 31.5, and the share price is now 26% below its 50-day moving average of EUR 11.96. Yet the longer-term trend remains intact: Nokia trades more than 15% above its 200-day average of EUR 7.72, a level that has held since the August 2025 low of EUR 3.45. The annualized volatility has surged to over 66%, underscoring the heightened uncertainty around the name.
Should investors sell immediately? Or is it worth buying Nokia?
Amid the chaos, Nokia has continued to push its AI narrative forward. On July 15, the company — together with Nvidia — launched what it calls the first commercially available AI-RAN platform. The technology promises to boost spectral efficiency in mobile networks by 20% initially, with an eye on 50% improvement by 2027 and a doubling by 2028. The announcement is seen as a strategically important step to win over operators building AI-capable infrastructure, though it did little to stem the broader sell-off.
The market's focus now shifts squarely to the company's second-quarter earnings, due on July 23. The optics business, a key growth driver, saw network infrastructure revenues rise 6% in the first quarter, with optical networks up 20% and sales to AI and cloud customers jumping 49%. Analysts are projecting earnings per share of USD 0.07 on revenue of USD 5.59 billion, compared to USD 0.04 and USD 5.15 billion a year earlier.
Analyst sentiment remains surprisingly bullish despite the recent turbulence. JPMorgan lifted its price target on the U.S.-listed shares to USD 21, while Argus initiated coverage with a Buy and a USD 15 target. Morgan Stanley also came out with an Overweight rating and an USD 8 target, and SEB Equities upgraded the stock to Buy with a EUR 12 price objective. The consensus target stands at USD 14.67, implying significant upside from current levels — even as the stock trades at a price-to-earnings multiple of roughly 65.
That premium valuation leaves little room for disappointment. The upcoming earnings report will test whether Nokia can convert surging demand for AI-enabled fiber and cloud connectivity into tangible profit growth, or whether the concerns about component costs and competitive pressure will prove to be the dominant force. For now, the stock is caught between a long-term AI transformation story and the short-term reality of a market that is suddenly questioning the price tag of that future.
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