Nokia’s AI Orders Hit a Record, but a €732 Million Cash Drain and Supply Chain Fears Trigger a Steep Sell-Off
Published on 07/27/2026 at 05:21 | Redaktion boerse-global.de
Nokia delivered a second-quarter earnings beat, yet its stock has been hammered — a disconnect that has left investors scratching their heads. The Finnish network equipment maker’s comparable operating profit rose 18% year-on-year to €434 million, coming in roughly 13.6% above the analyst consensus. Revenue reached €4.815 billion, with earnings per share of €0.07. On the surface, the numbers tell a story of operational strength.
But the market’s reaction tells a different tale. Over two trading sessions in Helsinki, the stock shed around 10%, closing at €8.222. The selling accelerated on Friday, with shares tumbling another 6.32% to €8.06. Over the past 30 days, Nokia’s equity has lost 33.53% of its value. The 14-day relative strength index now sits at 29.5 — deep in oversold territory, suggesting the sell-off may have overshot the fundamental picture.
The paradox centers on a single question: How quickly can Nokia convert its surging AI order book into real revenue? The company’s AI and cloud segment saw its backlog swell to €2.8 billion — 6.3 times the quarterly sales generated from that business. Management expects to convert roughly half of those orders into revenue within the next twelve months, a timeline that would extend the growth narrative well into 2027. But investors are not waiting to see if that promise holds.
The Cash Conundrum
The immediate source of anxiety is cash. Nokia posted a negative free cash flow of €732 million in the second quarter, a figure that stands in stark contrast to the headline earnings beat. The company attributed the drain to seasonal factors, including employee bonus payments and higher working capital needs. On top of that, Nokia faces restructuring costs of around €800 million for the full year.
Should investors sell immediately? Or is it worth buying Nokia?
The bear case is straightforward: If the company is burning cash faster than it can convert its record order book into profits, the margin story may be weaker than it appears. The bull case counters that the cash outflow is temporary — a function of the ramp-up phase in AI infrastructure, not a structural problem. The next test will come in the third quarter, when Nokia has guided for revenue growth of 3% to 7% sequentially. If cash flow remains negative then, the skepticism of recent weeks will likely harden.
Supply Chain Bottlenecks Add to the Pressure
Nokia’s ability to deliver on its AI orders is not just a question of demand — it is also a question of components. The company flagged supply constraints for memory chips and indium phosphide wafers, critical inputs for its optical networking and AI hardware. These bottlenecks could slow the conversion of the order book into recognized revenue, even as the backlog itself grows.
Management has been candid about the lumpy nature of the AI order flow, warning that the timing of deliveries is inherently unpredictable. That unpredictability is a double-edged sword: It creates upside potential if the logjam clears, but it also leaves the stock vulnerable to disappointment if delays persist.
The Bull Case: Growth Segments Are Firing
For all the near-term noise, Nokia’s underlying business is showing real momentum. The AI and cloud segment nearly doubled its revenue to €446 million. Network Infrastructure grew 12%, with Optical Networks up 20% and IP Networks climbing 16%. Mobile Infrastructure added 6% growth. The company also launched its first commercial AI-RAN platform, embedding artificial intelligence directly into mobile networks, and is expanding into defense with AI-powered 5G tools — a niche that analysts see as an additional growth driver.
The gross margin improved by 70 basis points to 46%, while the operating margin rose by the same amount to 9%. On a twelve-month basis, Nokia’s stock is still up 116.90%, and it has gained 44.19% since the start of the year. The 200-day moving average sits at €7.84, meaning the stock is still trading about 3% above that long-term trend line — a technical signal that the uptrend has not yet broken.
Nokia at a turning point? This analysis reveals what investors need to know now.
Valuation and the Dividend
Nokia’s shares are now trading at roughly 46% below a fair value estimate of €15.16 from Simply Wall St, a gap that reflects both the growth potential and the execution risk. The price-to-earnings ratio stands at approximately 98.7 based on 2025 figures, a lofty multiple that underscores the market’s high expectations for AI-driven earnings growth. Institutional investors hold 5.28% of Nokia’s shares, while Renaissance Technologies boosted its stake by 131.3% in the first quarter to 13.29 million shares, worth about $106.9 million.
On Monday, the stock went ex-dividend, with shareholders receiving €0.04 per share — a modest payout that does little to offset the recent volatility. Nokia has maintained its full-year guidance for operating profit between €2.1 billion and €2.6 billion, with the fourth quarter implied to deliver €931 million to €1.43 billion. The next quarterly results are due on October 22.
The Bottom Line
Nokia finds itself at a crossroads. The AI order book is a genuine asset, and the operational metrics are improving. But the cash flow deficit, supply chain constraints, and restructuring costs have created a credibility gap that the market is punishing. The oversold RSI suggests a technical bounce may be near, but the fundamental resolution depends on whether the company can turn its record backlog into cash — and do it before investor patience runs out. The third quarter will be the first real test of whether the sell-off was a buying opportunity or a warning sign.
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Nokia Stock: New Analysis - 27 July
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