Nokia’s Q2 Beat Puts the Focus on Execution, Not Just AI Hype
Published on 07/23/2026 at 11:20 | Redaktion boerse-global.de
Nokia delivered a second-quarter profit that sailed past analyst estimates on Thursday, sending shares up 6.30 percent to €9.65 and extending the stock’s weekly gain to 5.86 percent. The headline figure — a comparable operating profit of €434 million, 18 percent higher than a year earlier and well above the €382 million consensus — gave investors the concrete numbers they had been waiting for. Yet the real story lies in the details of how the Finnish network equipment maker is reshaping its business, and in the gap between its reported earnings and the underlying operational momentum.
The comparable operating margin rose to 9.0 percent, while the comparable gross margin improved to 46.0 percent. Revenue grew 8 percent to €4.815 billion, or 9 percent on a currency-adjusted basis. That top-line performance was in line with the roughly €4.84 billion that analysts had penciled in ahead of the release.
The network infrastructure division led the charge, posting 12 percent growth, with optical networks and IP networking standing out as particular bright spots. More striking still: revenue from AI and cloud customers doubled to €446 million, and Nokia booked €2.8 billion in new orders from that segment. CEO Justin Hotard pointed to long-term contracts secured in both optical and IP networking, adding that the company expects to convert roughly half of those orders into revenue within the next twelve months. The supply chain, he noted, remains the industry’s binding constraint, prompting customers to lock in long-term commitments.
The Nvidia Factor and the AI Pivot
The earnings report arrives on the heels of a landmark partnership with Nvidia, which invested $1 billion in Nokia back in May. The two companies are jointly developing AI-RAN technology designed to process AI workloads directly within mobile networks. In mid-July, Nokia unveiled what it called the industry’s first commercial AI-powered radio access network platform, promising to more than double spectral efficiency by 2028.
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For investors, the so-called book-to-bill ratio in the AI and cloud segment has become a critical metric. After hitting an eye-catching 3x in the first quarter — meaning orders were flowing in three times faster than invoices were going out — the market was watching closely to see whether that momentum could be sustained. Thursday’s €2.8 billion order book suggests it can.
The Reported Numbers Tell a Different Story
The headline net profit, however, tells a far less flattering tale. Nokia’s reported earnings collapsed 95 percent year-on-year to just €5 million, with earnings per share falling to zero from €0.02. The reported operating margin turned negative at minus 1.0 percent, a swing of 430 basis points.
The culprit is a sharply accelerated restructuring program. Nokia now expects restructuring costs of €800 million for the full year, up from earlier estimates. An additional €350 million has been earmarked for the integration of its China operations, a process the company aims to complete within two years. Despite the weak reported profit, the board approved a dividend of €0.04 per share.
Guidance Lift — But It’s an Accounting Move
Nokia raised its full-year guidance for comparable operating profit to a range of €2.1 billion to €2.6 billion, up from €2.0 billion to €2.5 billion. But the adjustment is not a sign of improving underlying operations. Instead, it reflects an accounting reclassification: Nokia has moved its fixed wireless access CPE business and its enterprise campus edge unit into discontinued operations. The company has already agreed to sell the CPE business to Inseego, and management considers a sale of the enterprise campus edge unit highly probable.
Management expressed confidence in the second half, saying the company is entering it with momentum and remains on track to land slightly above the midpoint of the profit guidance.
Chip Costs and the Broader Industry Squeeze
Nokia’s strong quarter comes against a backdrop of rising memory chip prices, as AI companies hoover up supply and put pressure on telecom equipment makers across the board. Swedish rival Ericsson warned of exactly this cost pressure just last week, sending its own shares into a tailspin and stoking margin fears for the entire sector. That Nokia managed to expand its margins despite these headwinds likely contributed to Thursday’s positive share price reaction.
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Manufacturing Expansion in the US
Nokia confirmed it is pressing ahead with investments in its US optical manufacturing operations. A new factory in San Jose remains on track to begin production in the fourth quarter of 2026. Separately, the company plans to tenfold its capacity for advanced testing and packaging in Pennsylvania starting in the third quarter.
The Stock’s Two Faces
Despite Thursday’s rally, Nokia shares remain 35.5 percent below the 52-week high of €14.97 set in early June. The stock had fallen nearly a quarter over the prior 30 days, closing at €9.08 on Wednesday — a 3.32 percent single-day drop — as investors fretted about whether the AI narrative could translate into sustained earnings growth. The 14-day relative strength index of 35.6 had drifted close to oversold territory, suggesting the market was primed for a catalyst.
On a year-to-date basis, Nokia is still up 62.43 percent, a reminder that the recent sell-off came after a dramatic run. The question now is whether the company can convert its €2.8 billion AI order backlog into revenue fast enough to justify the valuation. Thursday’s numbers offered a strong start, but the second half of the year will be the real test.
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