The disconnect between Nokia’s operational momentum and its stock market performance has rarely been starker. The Finnish network equipment maker posted blockbuster second-quarter results driven by surging demand from AI and cloud customers, yet its shares have been hammered over the past month — a divergence that has left even seasoned investors scratching their heads.
The Numbers Tell Two Different Stories
On the operational side, the picture is unequivocally strong. Nokia reported net sales of EUR 4.8 billion for the second quarter of 2026, up 9 percent year-on-year on a comparable basis and 8 percent on a reported basis. Comparable profit jumped 64 percent to EUR 414 million. Revenue from AI and cloud customers soared 105 percent year-on-year, while the company booked EUR 2.8 billion in AI-related orders during the quarter.
The growth engine was the Network Infrastructure segment, which expanded 12 percent. Within that, the Optical business surged 20 percent and IP networking climbed 16 percent. Mobile Infrastructure grew 7 percent, with Portfolio Businesses up 6 percent. Comparable gross margin improved 70 basis points to 46 percent, while comparable operating margin also rose 70 basis points to 9 percent.
Yet the reported operating margin tells a different story entirely: it fell 430 basis points to minus 1.0 percent, dragged down by ongoing restructuring costs. Nokia expects those charges to total around EUR 800 million for the full year 2026, which explains the gap between underlying strength and the bottom line.
A Credit Upgrade Arrives at a Tense Moment
Against this backdrop, S&P Global moved on July 30 to lift its outlook on Nokia from “stable” to “positive,” while affirming the BBB- rating. The agency cited the company’s successful diversification and growing demand for network infrastructure from AI and cloud customers. S&P projects 10 to 15 percent annual growth in Nokia’s Network Infrastructure segment through 2027, fueled by the data appetite of major cloud providers, and sees a possible one-notch upgrade within the next 24 months.
The timing is notable. The shares have been under intense pressure, with the stock down roughly 30 percent over the past month — a slide that analysts attribute to broader jitters about the massive AI capital expenditure programs at Amazon, Microsoft, Meta and Alphabet. As those hyperscalers pour billions into data centers, investors have begun questioning the ultimate profitability of those outlays. For Nokia, that creates a double-edged sword: the investment wave is driving demand for its optical and IP infrastructure, but any slowdown in hyperscaler spending would hit its highest-margin business directly.
Should investors sell immediately? Or is it worth buying Nokia?
The Technical Picture Is Uncomfortable
The chart offers little comfort. From a 52-week high of EUR 14.97 reached on June 3, the stock has shed roughly 46.5 percent. The 14-day relative strength index sits at 34.4, approaching oversold territory. On Monday, the shares tested their 200-day moving average at EUR 7.94, a level chart technicians view as a critical threshold — a sustained move above it could signal a more stable long-term trend.
The stock’s recent trajectory has been volatile: it slipped 1.08 percent on the day the quarterly results were digested, but climbed 0.98 percent to EUR 8.01 on the Monday following the S&P announcement. Over the past 30 days, the decline stands at roughly 28 to 30 percent depending on the measurement date, yet the shares remain up 43.26 percent year-to-date.
A Dividend and a Strategic Shift
Shareholders have a near-term catalyst to watch. Nokia pays a quarterly dividend of EUR 0.04 per share on August 6, 2026, with the record date having passed on July 28. The payment is part of a total distribution of up to EUR 0.14 per share for fiscal 2025, approved at the annual meeting in April. Management retains authorization for up to EUR 0.06 per share in additional payouts.
Meanwhile, the strategic transformation continues. On July 14, Nokia announced an expansion of its 5G partnership with Taiwan Mobile, supplying its AirScale portfolio along with AI-powered software including MantaRay SON and Predictive Hardware Analytics to automate and optimize network operations in Taiwan.
Clayton Wagar, head of Nokia’s AI business in Finland, frames the broader opportunity in stark terms: networking AI clusters has become as critical to data center success as raw compute power. With clusters scaling to millions of GPUs, the shift from electrical to optical interconnects is already underway, requiring long-haul connectivity and new cooling methods. Existing data centers, he notes, must be retrofitted for liquid cooling — a transition that aligns neatly with the strong optical and IP growth Nokia just reported.
The question now is whether the market will eventually reward what the order book is showing. For the moment, Nokia’s operational story and its share price are moving in opposite directions, and investors are left to decide which one reflects reality.
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