Nokia's Two-Speed Transformation: Cutting China Loose While Betting Big on AI
Published on 08/24/2026 at 09:11 | Redaktion boerse-global.de
The numbers tell a story of a company in the middle of a profound strategic pivot. Nokia is simultaneously dismantling its once-important China operations and repositioning itself as a key player in the artificial intelligence infrastructure boom — a dual-track strategy that has analysts scrambling to update their models even as the share price treads water.
The Finnish network equipment maker confirmed plans to eliminate roughly 1,600 positions across Greater China and wind down most of its local operations by the end of next year. A company spokesperson framed the retreat as a response to years of steady decline in the region, with the goal of better aligning the Chinese business with Nokia's global structure. The company has not yet specified exactly how many sites will close or precisely which locations are affected.
A Costly Exit With a Payoff
The restructuring comes with a hefty price tag. Media reports put the integration costs for the China overhaul at around €350 million for the current year — a sum equivalent to roughly one-third of the midpoint of Nokia's full-year operating profit guidance. The long-term payoff, however, is projected at approximately €200 million in annual savings.
Despite the near-term drag, management has left its 2026 outlook untouched. The company continues to guide for comparable operating profit between €2.1 billion and €2.6 billion, a forecast that was actually raised last week following a surge in order intake from the AI and cloud infrastructure segment.
That order book has swelled to €2.8 billion, a figure first flagged by Bank of America in mid-August. The strength in that pipeline has become the central pillar of the investment case, and it has triggered a wave of target-price revisions across the sell-side.
Should investors sell immediately? Or is it worth buying Nokia?
Analysts Rush to Reprice the Story
JPMorgan Chase reaffirmed its "Overweight" stance with a $21 price target, arguing that the market is significantly underestimating Nokia's AI and cloud revenue potential for 2027 and 2028. Morgan Stanley lifted its target on the Helsinki-listed shares from €8.50 to €11.00, while JPMorgan's own euro-denominated target moved from €6.90 to €12.00. Argus upgraded the US-listed shares from "Hold" to "Buy" with a $15.00 target, citing momentum in the AI-driven networking business. SEB Equities had already moved to "Buy" on August 19 with a €12.00 target, pointing to accelerating demand for AI-native infrastructure.
The analyst enthusiasm is underpinned by a series of recent announcements. In early August, Nokia and Nvidia unveiled what the company describes as the industry's first commercial AI-RAN platform, designed to improve spectral efficiency in 4G and 5G networks using AI-native anyRAN software. Nokia also signed a multi-year exclusive deal with Orange Belgium to modernize that operator's transport network using the Nokia 1830 Photonic Service Switch.
Industry recognition has followed. In Omdia's "Market Landscape: Core Vendors – 2026" report, Nokia led all seven evaluated categories in the mobile core network portfolio for the second consecutive time, including AI/ML, cloud-native maturity, and automation.
A Market That Hasn't Caught Up
Yet the share price has been slow to reflect the improving narrative. The stock closed Friday at €8.80, up 0.7% on the day but down 6.0% over the past seven sessions. That leaves the shares roughly 41% below their 52-week high of €14.97, reached in early June — though they remain far above the €3.62 low from last August, and have more than doubled over the past twelve months.
On a monthly basis, the stock is still up 9.2%, and year-to-date gains stand at 57%. The 14-day relative strength index sits at 47, indicating neither overbought nor oversold conditions.
The disconnect between the analyst community's enthusiasm and the market's recent caution may reflect lingering uncertainty about execution. Five senior managers — including Victoria Hanrahan, Stephan Prosi, Louise Fisk, Raghav Sahgal, and David Heard — purchased a combined 4,580 shares on August 13 at €9.0910 per share, a modest show of internal confidence.
A mid-August 9.6% single-day jump, triggered by a surprisingly upbeat forecast from US optical networking supplier Lumentum, demonstrated how sensitive the stock remains to signals from that ecosystem. But the subsequent pullback suggests investors are waiting for harder evidence.
The next test comes on October 22, when Nokia reports third-quarter results. By then, the market will want to see whether the raised guidance translates into concrete numbers — and whether the China exit proceeds on schedule without disrupting the AI momentum that has become the company's primary growth engine.
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