Nokia investors are wrestling with a stark contradiction: how can a stock that recently unveiled a landmark artificial-intelligence partnership with Nvidia and secured a major 5G contract lose more than 40% of its value in seven weeks? The answer lies in the yawning gap between long-term promise and near-term profit delivery, a gap that will be tested when the Finnish network equipment maker reports second-quarter results on Thursday.
The stock closed Monday at €8.89, down nearly 30% over the past 30 days and a staggering 40.61% below its 52-week high of €14.97 reached on June 3. The decline has accelerated in recent days: the shares posted five consecutive losing sessions, and the last seven trading days alone erased 13.4% of their value. A brief bounce above €11 earlier this month quickly fizzled as sellers regained control.
Part of the selling pressure came from across the Baltic Sea. Ericsson, Nokia’s Swedish rival, reported a 6% drop in second-quarter revenue to 52.7 billion Swedish kronor, though its operating profit of 6.52 billion kronor beat the 6.42 billion kronor consensus. More troubling was a remark from Ericsson’s chief financial officer, who told Reuters that the entire industry is feeling the strain from the AI buildout – “including us.” That comment has amplified doubts that AI-driven investment can offset the prolonged weakness in traditional telecom infrastructure, a narrative that underpinned much of Nokia’s rally over the past year.
Nokia itself has not been idle. On July 15, it joined forces with Nvidia to launch what it called the industry’s first commercial AI-RAN platform, promising to more than double spectral efficiency in mobile networks by 2028. A day earlier, it announced a 5G modernization deal with Taiwan Mobile. Yet the market has shrugged off both announcements, recognizing that pilot projects will not start until late this year and broad commercial availability is not expected before 2027. The long monetization timeline appears to have been repriced abruptly by investors.
Should investors sell immediately? Or is it worth buying Nokia?
The technical picture reflects the severity of the correction. The 14-day relative strength index has fallen to 31.4, hovering just above oversold territory. At €8.89, the stock trades roughly 25% below its 50-day moving average of €11.90 – a signal of how rapidly sentiment has soured. Despite the rout, Nokia is still up about 59% year to date, largely thanks to Nvidia’s strategic investment and the AI-infrastructure euphoria that swept markets earlier in 2024.
Thursday’s earnings release, scheduled for around 8:00 a.m. Finnish time with an analyst webcast pushed back to 3:00 p.m., will be a make-or-break moment. Analysts expect earnings of $0.07 per share on revenue of $5.59 billion. The focus will be on whether growth in cloud and network services can compensate for cyclical weakness in the traditional telecom business. But more important than the headline numbers will be management’s guidance for the second half, where Nokia previously indicated that a significant portion of its full-year profit target will be weighted.
That profit concentration is unusually high. The expected second-quarter earnings represent roughly 16% of the full-year consensus – the top end of Nokia’s historical range of 12% to 16%. Any disappointment would mean the company must deliver exceptionally strong results in the second half to meet its annual targets. Currency tailwinds are unlikely to help: the euro-dollar exchange rate is currently close to Nokia’s own planning assumptions, leaving operating performance to do the heavy lifting.
The market will scrutinize margins, cost control, and the tangible progress of new growth areas such as optical networks, AI-native data centers, and defense communications. Only when these segments visibly offset the drag from legacy telecom infrastructure is sentiment likely to turn. For now, the stock’s oversold condition may offer short-term technical relief, but the fundamental question remains: can Nokia’s AI story generate real cash flows soon enough to justify the valuation that the stock once commanded? Thursday’s report will provide the first hard evidence.
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