Nokia’s AI Orders Surge to €2.8 Billion, Yet a Cash Drain and Chip Warning Trigger a 33% Rout
Published on 07/26/2026 at 04:02 | Redaktion boerse-global.de
The disconnect between Nokia’s operational momentum and its stock price has rarely been starker. The Finnish telecom equipment maker reported a second-quarter earnings beat, a massive influx of AI-related orders, and an upgraded profit forecast — yet shares have shed more than a third of their value in 30 days, closing Friday at €8.06. That marks a 33.53% slide from the prior month and a 46.16% retreat from the June high of €14.97.
The single-day drop of 6.32% on the day of the results crystallized the market’s unease. While the headline numbers looked strong — comparable operating profit rose 18% to €434 million, beating the €382 million consensus, and revenue of €4.82 billion also topped expectations — investors zeroed in on the blemishes.
The AI Boom That Can’t Escape Supply Constraints
The standout performer was the AI and cloud division, which doubled revenue to €446 million, now representing 9.3% of total group sales. Order intake in the segment hit €2.8 billion in the second quarter alone, nearly triple the first quarter’s pace. CEO Justin Hotard confirmed that roughly half of those orders should convert to revenue within the next 12 months.
Yet the same report contained a warning that overshadowed the good news: chip shortages and supply bottlenecks could persist into 2027. Nokia described itself as “generally constrained,” particularly for high-end optical products, with memory chips flagged as the biggest supply risk and pricing pressure spreading across the industry.
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The company is taking steps to mitigate the problem, including the acquisition of an NXP Semiconductors chip fabrication facility in Arizona — a move management framed as gaining more control over its semiconductor supply chain. But the immediate market reaction suggests investors doubt how quickly that capacity will come online.
Cash Flow Becomes the Flashpoint
The most acute concern, however, centers on free cash flow. Nokia burned through €732 million in the second quarter, a figure management attributed largely to seasonal bonus payments. The company now expects to land at the lower end of its 55% to 75% cash conversion target range — a signal that has rattled investors who were hoping for evidence of the AI order book translating into cash generation.
The cash drain is especially jarring given that the upgraded full-year operating profit guidance — raised to a range of €2.1 billion to €2.6 billion — is largely technical in nature. The increase reflects the reclassification of two divested business units rather than an underlying improvement in earnings power.
For the third quarter, Nokia expects sequential revenue growth of 3% to 7% but only a flat operating profit versus Q2, due to software phasing effects. That means the margin acceleration some had hoped for is on hold, at least temporarily.
Technical Damage and the 200-Day Line
The stock’s technical picture has deteriorated sharply. The 14-day relative strength index has fallen to 29.5, deep in oversold territory that historically attracts contrarian buyers. The share price now sits just 2.84% above its 200-day moving average of €7.84 — a level that will be critical in determining whether the multi-month AI rally is merely pausing or breaking down entirely.
The 50-day moving average tells a starker story: the stock is now 30.76% below that line, underscoring how abruptly sentiment has shifted. Annualized 30-day volatility has surged to 66.88%, reflecting the tug-of-war between bargain hunters and profit-takers.
Restructuring costs of around €800 million for the full year add another layer of drag, while the fixed networks business — deliberately being refocused toward higher-margin products — saw currency-adjusted revenue fall 2%.
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Two Paths Forward
For the bulls, the argument rests on the order pipeline and the strategic pivot. The Nvidia partnership and the launch of a native AI RAN platform represent genuine structural shifts, not marketing rhetoric. If the Arizona chip facility comes online as planned and the order conversion proceeds on schedule, the current sell-off could prove to be an entry point within an intact uptrend. The stock is still up 44.19% year-to-date and 116.90% over the past 12 months.
The bears counter that margins face persistent pressure from chip costs, that cash conversion may prove structurally weak rather than merely seasonal, and that the core telecom infrastructure business remains a drag. With the 200-day line under threat and the next major catalyst — the Q3 report — still months away, the path of least resistance could be lower.
The coming week will be pivotal. If the €8.06 level fails to hold and the stock breaks decisively below the 200-day moving average, the chart damage could overwhelm the fundamental story. If it holds, the oversold RSI reading may attract enough dip-buying to stabilize the stock — at least until the next earnings report provides a clearer view on whether the AI order boom is finally starting to flow through to cash.
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