Nokia’s Chip Supply Warning Wipes Out a Quarter of Gains Despite Blowout AI Orders
Published on 07/25/2026 at 08:51 | Redaktion boerse-global.de
The disconnect between Nokia’s operating performance and its stock price has rarely been wider. On Friday, shares tumbled 6.32 percent to €8.06, capping a weekly loss of 9.38 percent and extending a brutal 30-day rout that has erased 33.53 percent of the company’s market value. Yet the quarterly report that triggered the sell-off was, by almost any operational measure, a standout.
Revenue for the second quarter of 2026 rose 9 percent year-on-year, gross margin expanded by 70 basis points to 46 percent, and operating margin matched that improvement, also climbing 70 basis points to 9 percent. The management team reaffirmed its full-year guidance and forecast sequential revenue growth of 3 to 7 percent for the third quarter. The problem? A single line from CEO Justin Hotard during the earnings call: memory chip shortages will constrain Nokia until at least 2027.
That warning was enough to turn a solid quarter into the stock’s worst weekly performance of the year. The relative strength index has plunged to 29.5, deep in oversold territory, while annualized volatility has spiked to 66.88 percent. After the sell-off, Nokia now trades just 2.84 percent above its 200-day moving average of €7.84 — the last technical support line before the uptrend that began at the 52-week low of €3.45 comes under serious threat.
A Record Order Book Meets a Structural Bottleneck
The AI & Cloud segment delivered the strongest performance in the entire group, with revenue more than doubling year-on-year and order intake hitting €2.8 billion — a record for the division. Nokia expects roughly half of that volume to convert into revenue within the next twelve months, as customers lock in supply capacity in a tight market. The optics business grew 20 percent, IP networks rose 16 percent, and the broader networks division expanded 12 percent on a currency-adjusted basis.
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But the very AI boom that is driving this demand is also creating the supply squeeze. Hotard’s warning that memory chip constraints will persist for at least another 18 months has shifted investor focus from the demand story to the execution risk. Can Nokia convert its swelling order book into revenue fast enough to offset rising component costs and margin pressure? The company’s own third-quarter guidance of 3 to 7 percent sequential growth leaves little room for error if parts inflation accelerates.
The Bear Case: A Multi-Year Cost Burden
The chip shortage is not a one-off headwind but a structural cost liability that could stretch for years — and it arrives at a time when Nokia’s legacy businesses are already under pressure. The fixed networks division fell 3 percent to €490 million, or 2 percent on a currency-adjusted basis, driven by lower sales of fiber products to residential customers as Nokia deliberately shifts its portfolio toward higher-margin offerings.
That weakness alone would be manageable, but it underscores that not every part of the business is riding the AI wave. Operating profit for the quarter came in at €434 million, up 18 percent, and Nokia raised its full-year 2026 operating profit guidance to a range of €2.1 billion to €2.6 billion. Yet the market is pricing in the risk that the chip bottleneck will eat into those margins before the AI order backlog can fully convert.
Technical Crossroads
From the 52-week high of €14.97 reached in early June, the stock has now fallen 46.16 percent. The 200-day moving average at €7.84 represents the final line of defense for the longer-term uptrend. A break below that level would open up significant downside toward the €3.45 low recorded in August 2025, though the oversold RSI reading suggests the selling may be overdone.
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Nokia has also been making strategic moves beyond the quarterly numbers. The company acquired a chip fabrication campus in Arizona and expanded its 5G partnership with Taiwan Mobile, signaling a long-term commitment to vertical integration and supply chain control. With a market capitalization of €48.57 billion, Nokia is no longer a turnaround story but an established player transitioning from traditional telecom infrastructure to high-margin AI infrastructure.
The next real test comes with the third-quarter report, when investors will see whether Hotard’s 3-to-7 percent growth forecast holds — and whether the memory chip shortage is already eating into the company’s hard-won margin gains. For now, the market has made its judgment: the supply constraint matters more than the demand surge.
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