The market has already made up its mind about Nokia’s artificial intelligence ambitions — the question now is whether the underlying business can catch up to the share price.
Since the start of the year, the Finnish network equipment maker’s stock has climbed roughly 65 percent, with a 13 percent surge in just the past seven trading days. Yet even after that run, the shares sit about 38 percent below their 52-week high of €14.97, reached in June. At the current level of around €9.21, the stock is trading roughly 10 percent beneath its 50-day moving average of €10.19 — a sign that momentum has cooled even as the broader uptrend remains intact.
That tension between promise and delivery was on full display this week. S&P Global Ratings lifted its outlook on Nokia to positive on Thursday, keeping the long-term issuer rating at BBB-. The move follows a second-quarter report that showed net sales climbing 8 percent year over year, with earnings per share improving from €0.04 to €0.07 — ahead of the €0.05 analysts had penciled in. Revenue reached €4.82 billion, up from €4.44 billion a year earlier.
The standout figure was in the AI & Cloud division, where revenue more than doubled on the back of €2.8 billion in orders. Roughly half of that backlog is expected to convert into revenue within the next twelve months. Management used the momentum to nudge up its 2026 profit guidance while trimming investment plans — a combination designed to signal that growth isn’t coming at the expense of capital discipline.
The company’s full-year operating profit forecast stands between €2.1 billion and €2.6 billion, with capital expenditure of €800 million to €900 million. A balance sheet featuring €5.46 billion in cash against €2.33 billion in long-term debt provides room to build out the AI-RAN partnership with NVIDIA without jeopardizing those targets.
Analysts Split as Valuation Debate Intensifies
The analyst community is far from unanimous. AlphaValue/Baader Europe downgraded Nokia to “Reduce” on Wednesday — yet simultaneously raised its price target. That seemingly contradictory stance reflects a broader sentiment: the operational story is improving faster than expected, but after such a steep run, some observers see the valuation as stretched.
Others are more constructive. Bank of America reaffirmed its buy recommendation with a price target of $18.50, while SEB Equities upgraded the stock to Buy with a €12 target. The two figures aren’t directly comparable given their different currency bases, but both signal meaningful upside from current levels.
The stock’s behavior suggests investors are braced for turbulence. With an annualized 30-day volatility of 74 percent, Nokia ranks among the most jittery large-caps in the market. A recent 30-day pullback of 5.9 percent demonstrated how quickly profit-taking can arrive when fresh catalysts are absent.
Should investors sell immediately? Or is it worth buying Nokia?
Regulatory Tailwind and Strategic Moves
Beyond the numbers, Nokia is positioning itself for a potential regulatory windfall. The US Federal Communications Commission is expected to ban Chinese optical transceivers — a move that could hand Nokia additional market share among American network operators if it materializes. That remains an expectation, not a decision, and a regulatory failure would remove one of the key growth drivers investors are currently pricing in.
Operationally, the company has been active on multiple fronts. In early August, Nokia struck a deal with New Zealand network operator Chorus to roll out a nationwide precision timing service. July brought the unveiling of a commercial AI-RAN platform built on NVIDIA technology, described as a step toward 6G and greater network efficiency. The platform is slated for a 2027 rollout as a subscription model — a timeline that represents a commitment, not proof of commercial success.
On the corporate governance side, Nokia transferred 957,142 treasury shares to participants in its share-based compensation programs on August 7, without consideration. The transaction, authorized on October 2, 2025, is a routine execution of existing remuneration plans rather than a new capital signal.
The Decisive Variable
What ultimately determines whether this rally has staying power is straightforward: how much of that €2.8 billion AI & Cloud order book translates into recurring revenue and margin — and how quickly.
The market has already priced in a substantial premium. The stock is up around 160 percent over twelve months, and trades 14 percent above its 200-day moving average, suggesting the medium-term trend remains intact. But the gap to the 52-week high of minus 38 percent is a reminder that a correction of that magnitude has happened before — and could happen again if the order momentum stalls.
The broader AI infrastructure complex is also trading at elevated valuations, as the parallel debate over NVIDIA’s $500 billion financing framework illustrates. Should doubts emerge about returns on that capital, suppliers like Nokia could feel the ripple effects.
For now, the fundamental narrative — growing AI orders, improving profitability, and now a more favorable credit outlook — remains intact. The next concrete test arrives with execution against the 2026 guidance: whether the order surge becomes a sustainable earnings trend or fades as a temporary boost.
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