Nokia's Brutal Selloff and the AI Cost Squeeze: What the Q2 Report Must Show
Published on 07/20/2026 at 12:12 | Redaktion boerse-global.de
Nokia shares have taken a drubbing over the past month, shedding more than a quarter of their value as a technology rout and an earnings warning from rival Ericsson sent investors running for cover. The Finnish telecom equipment maker now heads into its second-quarter report on Thursday with its stock at €8.90 — a far cry from the 52-week high of €14.97 touched in early June — and the market questioning whether its AI-networking ambitions can absorb the same cost pressures that are battering its Swedish competitor.
The selloff accelerated last week after Ericsson delivered weaker-than-expected results and flagged rising expenses for memory chips and semiconductor components, driven by surging demand for AI infrastructure. The warning hit Nokia directly: investors feared that similar margin strain would ripple across the entire telecom gear industry. By Friday, Nokia had slumped 2.4% to close at €8.90, capping a seven-day drop of 13.5% and a monthly decline of 25.3%. A modest bounce on Monday lifted the stock to €9.02, up 1.3%, but that did little to repair the damage.
The broader market only added to the pressure. The Philadelphia Semiconductor Index has tumbled more than 18% in July, entering a technical bear market, as geopolitical tensions in the Middle East pushed oil above $88 a barrel and China’s Kimi K3 AI model rattled sentiment. The S&P 500 lost roughly 1% on Friday, while the Nasdaq dropped 1.5%. Nokia’s 30-day annualized volatility now stands at 66.6%, with the longer-term figure at 66.1% — a sign that sharp price swings are likely to continue around the earnings release.
Should investors sell immediately? Or is it worth buying Nokia?
Against that backdrop, the consensus estimates paint a mixed picture. According to one analyst survey, second-quarter revenue is expected to come in at €4.822 billion, up 7.2% sequentially, while the gross margin is seen slipping 80 basis points to 44.7%. Another poll puts the top line at $5.59 billion (roughly €5.15 billion), with earnings per share of €0.07 versus €0.04 a year ago. The divergence in estimates underscores the uncertainty around Nokia’s near-term trajectory. Crucially, the company’s management has raised its growth targets for the Optical Networks and IP Networks divisions, signaling optimism in the infrastructure business. The AI and cloud segment — which surged 49% in the first quarter and now accounts for about 8% of group revenue — also provides a buffer, backed by an order book worth around €1 billion.
Despite the recent rout, Nokia’s longer-term performance remains impressive. From a 52-week low of €3.45 last August, the stock has more than doubled, and year-to-date it is still up 61.3%. The rally was fueled by hopes that Nokia’s AI-native networking strategy — including a partnership with Nvidia to embed GPU computing directly into baseband technology — would unlock new efficiencies in spectrum use and drive demand. That alliance, branded AI-RAN, aims to make mobile networks software-defined and AI-native, helping operators use existing infrastructure more efficiently instead of buying expensive new spectrum.
Wall Street has largely held its nerve. The consensus rating remains a Buy, with an average price target of $14.67. JPMorgan lifted its target to $21 in June and maintained Overweight, while Argus Research upgraded the stock to Buy in April with a $15 target. However, short-term technical signals are less encouraging: the MACD sits below its signal line, and the 14-day relative strength index — at 31.5 on Friday and 32.9 after Monday’s bounce — remains deeply oversold.
All of this sets the stage for a make-or-break moment on Thursday. Nokia needs to demonstrate that its AI-driven growth can cushion the kind of chip-cost headwinds that Ericsson just flagged, while also meeting margin expectations. With the stock now more than 40% off its peak and volatility elevated, the earnings call will either restore confidence in the AI-network narrative or deepen the suspicion that the entire sector faces a profit squeeze. For investors who rode the stock from €3.45 to nearly €15, the next few days will be decisive.
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