The numbers coming out of Nokia’s headquarters in Espoo tell two wildly different stories. On one side, the Finnish telecom equipment maker just posted a quarter where net profit nearly doubled, AI and cloud orders hit €2.8 billion, and comparable earnings from continuing operations jumped to €414 million from €252 million a year earlier. On the other, the stock has shed nearly a third of its value in 30 days, tumbling from a June high of €14.97 to trade at €7.94 — a 47% peak-to-trough slide that has left even bullish investors scratching their heads.
The disconnect is stark enough to warrant a closer look at what’s really going on beneath the surface.
A Dividend Day No One Is Celebrating
Adding to the noise, Nokia’s shares went ex-dividend on July 28, meaning new buyers no longer qualify for the next payout. The board approved a €0.04 per share distribution on July 23, the second of four planned quarterly tranches for fiscal 2025, with payment scheduled for August 6. The annual general meeting authorized up to €0.14 per share in total, leaving €0.06 still to come after this installment.
In normal times, a dividend date is a routine corporate event. These are not normal times. The stock closed the prior week at €8.06, down 6.32%
The Operating Engine Is Humming
Strip away the market’s mood swings, and Nokia’s underlying business is showing real muscle. Currency-adjusted comparable net sales rose 9%, powered by a 12% jump in network infrastructure. Optical networks climbed 20%, IP networks added 16%. The gross margin expanded 70 basis points to 46.0%, while the operating margin hit 9.0%, also up 70 basis points.
The real headline-grabber is the AI and cloud segment. Net sales in that unit grew 105% year over year, and the order intake reached €2.8 billion. Management estimates that roughly half of that backlog will convert to recognized revenue within the next 12 months, as customers rush to secure supply commitments in a tight market.
Yet the stock keeps falling. That’s the crux of the bear case: the market is no longer rewarding earnings beats. It wants proof that the AI transformation can outrun the decay in Nokia’s legacy telecom business before it will assign a higher multiple.
Supply Constraints, Not Demand Destruction
Nokia’s own management points to component shortages — particularly memory chips — as the bottleneck, not any lack of customer appetite. That distinction matters. A supply-side cap on revenue recognition is fundamentally different from a demand collapse. It limits near-term results without undermining the long-term growth thesis.
Should investors sell immediately? Or is it worth buying Nokia?
The fixed networks division, which shrank 2% to €490 million, illustrates the point. That decline is by design: Nokia is deliberately exiting low-margin fiber-to-the-home products for consumers and reallocating resources toward higher-margin carrier equipment. It’s a strategic pivot, not a sign of competitive weakness.
The Technical Picture Screams Oversold
The chart tells a story of its own. The 14-day relative strength index sits at 28.9 — deep in oversold territory. The stock trades 31.35% below its 50-day moving average of €11.56. The 30-day annualized volatility of 66.17% reflects just how violently sentiment has swung.
Remarkably, the share price is only 1.04% above its 200-day moving average of €7.86. That line has historically served as a critical trend anchor. A clean break below it would mark the first real capitulation signal since the AI rally began. Holding above it, on the other hand, suggests the long-term uptrend remains intact despite the current sell-off.
UBS weighed in on July 24, cutting its price target to €9.65 while maintaining a neutral rating — a sign that even the cautious camp sees more value than the current price reflects.
The Cash Flow Catch
For all the optimism around orders, Nokia’s cash position bears watching. Free cash flow came in at negative €732 million, largely due to the seasonal payout of annual employee bonuses. Net liquidity dropped from €3.8 billion at the end of the first quarter to €2.8 billion at the end of the second. Management frames this as a seasonal pattern rather than a structural issue, but in a market already on edge, any cash drain amplifies anxiety.
The Real Risk Is Timing, Not Thesis
The bear argument against Nokia isn’t that its AI pivot is fiction. The order book and margin expansion argue otherwise. The real risk is temporal: it will take several quarters to convert that €2.8 billion backlog into recognized revenue. In the meantime, the fixed networks business will continue its managed decline, and the cash flow will remain lumpy.
At €7.94, the market appears to be pricing in more pessimism than the operating data justifies. The RSI near 29, the stock hugging the 200-day moving average, and a 30-day drop of 30% all point to an overreaction to short-term supply constraints. Whether that overreaction turns into a buying opportunity depends on one thing: Nokia’s ability to turn its AI order pipeline into recognized revenue faster than its legacy business erodes.
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