Nokia’s AI Orders Hit a Record, but a €732 Million Cash Drain Sinks the Stock
Published on 07/23/2026 at 20:31 | Redaktion boerse-global.de
Nokia’s second-quarter numbers tell two sharply different stories. On one side, the Finnish telecom equipment maker posted a profit beat and a record order book from AI and cloud customers. On the other, its free cash flow swung to a negative €732 million, triggering a 4% drop in the share price to €8.72 on Thursday.
The tension between operational momentum and financial strain has become the defining theme for investors as CEO Justin Hotard, who took the helm on April 1, pushes through a sweeping restructuring.
AI and Cloud: The Growth Engine
The standout performer was Nokia’s AI & Cloud division, where revenue more than doubled to €446 million, a 105% surge. The unit’s order intake for AI and cloud infrastructure hit a record €2.8 billion in the first half, with hyperscalers and enterprise customers racing to build out optical and IP networks for data centers. Management expects roughly half of that backlog to convert into revenue within the next 12 months, describing the environment as an “AI super-cycle.”
The broader network business also delivered solid gains. Optical networks grew 20% year-on-year, while IP networks rose 16%. Comparable group revenue came in at €4.82 billion, up 9% on a currency-adjusted basis, and comparable operating profit climbed 18% to €434 million — comfortably above the consensus analyst estimate of €382 million. The comparable gross margin improved by 70 basis points to 46.0%.
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Where the Cash Went
The headline earnings beat, however, masked a deteriorating cash position. Free cash flow plunged to minus €732 million, driven by seasonal bonus payments and higher working capital requirements tied to the fast-growing AI business. The reported operating margin fell to minus 1.0%, weighed down by accelerated one-time costs from Nokia’s ongoing restructuring program.
Restructuring charges totaled €390 million in the quarter, and Nokia expects the full-year figure to reach €800 million. These costs stem from the 2023-2026 efficiency program, the integration of its China joint venture, and additional adjustments in Europe.
Portfolio Shake-Up
Alongside the earnings release, Nokia confirmed the reclassification of two business units as discontinued operations. The company has signed a binding agreement to sell its fixed wireless access (FWA) customer-premises equipment business to Inseego, while the sale process for the Enterprise Campus Edge unit is well advanced. Both had been running under the “Portfolio Businesses” label since the start of 2026.
The divestitures reflect Hotard’s strategy to focus on intelligent networking and high-performance computing, including a recently announced partnership with Nvidia. As a result of the reclassification, Nokia has adjusted its full-year guidance: comparable operating profit for 2026 is now expected to land between €2.1 billion and €2.6 billion, with management pointing to a result slightly above the midpoint of that range.
Stock Under Pressure, but Not Out
The market’s reaction underscores the disconnect between Nokia’s growth narrative and its near-term financial realities. The stock has now fallen 41.74% from its 52-week high of €14.97, reached in early June. Over the past 30 days alone, the shares have shed nearly a quarter of their value.
Nokia at a turning point? This analysis reveals what investors need to know now.
Technical indicators suggest the sell-off may be losing steam. The 14-day relative strength index stands at 33.3, edging into oversold territory. Despite the recent correction, the stock remains up 56% year-to-date.
Looking ahead, Nokia expects sequential revenue growth of 3% to 7% in the third quarter, driven by AI and cloud demand rather than traditional telecom spending, which remains subdued. The central question for investors is whether the record order intake can eventually translate into positive free cash flow — or whether funding the AI boom will continue to strain the balance sheet.
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