The disconnect between Nokia’s operational trajectory and its stock market performance is becoming harder to ignore. The Finnish network equipment maker closed Thursday at €8.24, down 1.01% on the day, leaving the shares roughly 45% below their 52-week high of €14.97. Yet beneath that sluggish tape sits a company whose AI-related order book is swelling at a pace that has prompted a flurry of upgrades from the Street.
Analysts and Rating Agencies Line Up Behind the Turnaround
The most striking endorsement came from SEB Equities, which lifted Nokia from Hold to Buy with a €12 price target, citing expectations of accelerating growth driven by demand from the AI and cloud segments. Bank of America followed a similar script earlier in the week, nudging its price objective from $18 to $18.50 while reaffirming a Buy rating — the rationale being an exceptionally robust backlog in the company’s AI business.
Not everyone is singing from the same hymn sheet, however. Deutsche Bank trimmed its price target from €13.50 to €11.50 on July 27, though it maintained its Buy recommendation. The mixed signals from the sell-side underscore a broader uncertainty about how quickly Nokia’s operational momentum will translate into sustained share price appreciation.
The credit market is also warming to the story. S&P Global Ratings revised its outlook for Nokia from Stable to Positive at the end of July, keeping the long-term rating at BBB- and the short-term at A-3. The agency signaled that a one-notch upgrade could materialize within the next 24 months, provided Nokia keeps its cost base under control and continues to benefit from AI and cloud infrastructure spending.
The Numbers Behind the Optimism
The second quarter of 2026 provided ample ammunition for the bulls. Net sales climbed 9% year-on-year to €4.82 billion, with the AI & Cloud segment nearly doubling its revenue and booking €2.8 billion in new orders. Optical Networks grew 20% and IP Networks advanced 16%, giving the core networking business a solid foundation. Comparable earnings per share came in at €0.07, up from €0.04 in the prior-year period, while gross margin expanded 70 basis points to 46% and operating margin rose by the same amount to 9%.
Management responded by lifting its full-year guidance for comparable operating profit to a range of €2.1 billion to €2.6 billion. For the third quarter, Nokia projects revenue growth of 3% to 7% sequentially with stable profit, though the company expects the more pronounced earnings acceleration to arrive in the final quarter of the year.
Should investors sell immediately? Or is it worth buying Nokia?
The Cost of Transformation
None of this comes cheap. Restructuring charges hit €390 million in the second quarter alone, and Nokia now expects €800 million for the full year. The integration of Nokia Shanghai Bell, following its full acquisition, is slated for completion within two years, with €350 million in integration costs falling due by the end of 2026. Free cash flow turned negative at minus €732 million in the quarter — a figure that investors would be wise to monitor.
The portfolio is also being streamlined. Nokia has reclassified its Fixed Wireless Access CPE and Enterprise Campus Edge businesses as discontinued operations and agreed to sell the CPE unit to Inseego. The strategic logic is clear: shed non-core assets while doubling down on AI infrastructure.
Building for the Future
On the manufacturing front, Nokia is making bold moves to secure its own supply chain. The company has agreed with NXP Semiconductors to take over its semiconductor fab in Chandler, Arizona. Nokia will initially lease the facility from early 2027, gradually converting it to produce indium phosphide components for optical networks, with full ownership expected in the first quarter of 2029. Meanwhile, production at the San Jose site is set to ramp up in the fourth quarter of 2026, and testing capacity in Pennsylvania will be multiplied tenfold starting in the third quarter.
The product pipeline is equally active. Nokia has launched a new AI-RAN software platform, with pilot projects planned by the end of 2026 and commercial availability targeted for 2027. In the defense arena, the company announced a partnership with NestAI for connected applications in a NATO context, and it has struck a deal with Taiwan Mobile to modernize that operator’s 5G network using Nokia’s AirScale platform.
A Market Waiting for Proof
For all the operational progress, the share price remains stubbornly unresponsive. Year-to-date, Nokia is still up a respectable 47.41%, but the volatility has been extreme. The question hanging over the stock is whether the improving analyst sentiment and credit outlook can finally close the gap between the company’s fundamentals and its market valuation — or whether investors are simply waiting for the third-quarter results on October 22 to see if the momentum is sustainable.
Ad
Nokia Stock: Buy or Sell?! New Nokia Analysis from August 7 delivers the answer:
The latest Nokia figures speak for themselves: Urgent action needed for Nokia investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from August 7.
Nokia: Buy or sell? Read more here...
