Investors in the Finnish telecom equipment maker have enjoyed a ride that few could have predicted at the start of the year. Nokia’s shares have surged 105 percent since January, placing the stock among the top performers in European technology. But after a bruising Friday session that wiped 6.76 percent off the closing price, the question now is whether the rally has simply paused for breath or is about to give way to a more lasting correction. The answer — and the stock’s direction through the rest of the year — hinges squarely on the second-quarter earnings report due in July.
The technical picture already shows cracks. With the close at €11.44, Nokia has slipped below its 50-day moving average of €11.76 — a warning signal that traders often watch for signs of weakening momentum. The 200-day average at €7.34 remains far below, keeping the long-term uptrend intact, but the gap between the current price and the 52-week high of €14.97 hit in early June has widened to nearly 24 percent. The relative strength index sits at 43.6, indicating neither oversold nor overbought conditions, while the annualized 30-day volatility of roughly 75 percent suggests that sharp swings will continue.
What gave the stock its fuel was not the core telecom equipment business but the rapid expansion of Nokia’s AI and cloud networking division. Revenue in that segment soared 49 percent in the first quarter, and orders reached €1 billion. Optical Networks, a key beneficiary of AI data center demand, grew 20 percent. The first-quarter results themselves were strong: comparable operating profit rose to €281 million from €183 million a year earlier, on sales of €4.5 billion. Two recent partnerships have bolstered the narrative further. Nokia is working with Amazon Web Services to launch an Autonomous Networks Fabric that aims to bring Level-4 autonomy to telecom operators, with deployment expected later in 2026. And with Google Cloud, Nokia has integrated Gemini models into its Assurance Center, where early AI agents for router and event analysis are already operating. A full SaaS offering will debut on the Google Cloud Marketplace in September, with further releases slated for the end of the year.
Should investors sell immediately? Or is it worth buying Nokia?
All that optimism now faces a reality check in the form of the July report. Management has guided for sequential revenue growth of 5 to 9 percent in the second quarter, with the comparable operating result for the period projected to account for 12 to 16 percent of the full-year target of €2.0 billion to €2.5 billion. That year-end target is itself ambitious, and the market will be watching closely to see whether the trajectory is still on track. Additionally, Nokia announced capital expenditures of €900 million to €1.0 billion for 2026, primarily to expand production capacity in the Optical Networks segment. The company has set a free cash flow conversion rate of 55 to 75 percent from its operating result — a wide range that leaves room for disappointment.
Macroeconomic data in the coming days will set the broader mood. On July 1, Eurostat releases its flash estimate for eurozone inflation, which stood at 3.2 percent in May, alongside the ISM Manufacturing PMI for the United States — May’s reading was 54.0, marking five consecutive months of expansion, with electronic components and semiconductors flagged as scarce. The following day brings the US June jobs report, which could move bond yields and, by extension, the valuation multiples of capital-intensive tech stocks. That matters for Nokia: trading at 56 percent above its 200-day average, the stock has a substantial valuation cushion that can shrink quickly if rates rise.
The July report will determine whether Nokia’s transition from a traditional telecom hardware supplier into an AI-infrastructure and cloud-networking play is as advanced as the share price suggests. If the company confirms sequential growth and stays within its operating margin guidance, the stock has a solid fundamental footing. If it misses, the market will start asking how much of the AI and optical networking fantasy was already priced in. Either way, the test is coming — and the stakes could hardly be higher.
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