Nokia’s AI Orders Soar to €2.8 Billion, but a Cash Squeeze and Supply Chain Snags Trigger a Sharp Sell-Off
Published on 07/27/2026 at 03:02 | Redaktion boerse-global.de
Nokia has just posted what should be a headline-grabbing quarter: record orders in its AI and cloud business, surging revenue, and a raised profit forecast. Yet the market’s reaction tells a very different story. The Finnish network equipment maker saw its shares tumble 6.32% on Friday to close at €8.06, extending a brutal 30-day slide of 33.53%. The disconnect between operational strength and stock performance has left investors wrestling with a fundamental question: Is this a buying opportunity in an over-sold stock, or the beginning of a deeper correction driven by execution risks?
The numbers from the second quarter of 2026 are undeniably strong. Nokia booked €2.8 billion in orders from its AI and cloud division — nearly three times the level seen in the first quarter. Revenue from AI and cloud infrastructure nearly doubled, surging 105% to €446 million. Group comparable operating profit climbed 18% to €434 million, comfortably beating analyst expectations of around €382 million. The network infrastructure unit also delivered, growing 12% on a currency-adjusted basis, with optical networks jumping 20% and IP networks rising 16%.
But beneath the surface, cracks are appearing. Nokia posted a negative free cash flow of €732 million in the second quarter, a figure the company attributes to seasonal factors including employee bonus payments and higher working capital requirements. The cash drain has become a central concern for investors, particularly as the company also flagged restructuring costs of roughly €800 million for the full year. The question is whether the cash burn is a temporary byproduct of rapid AI-driven growth or a sign that margins are being squeezed faster than the record order book can be converted into real revenue.
Adding to the anxiety, Nokia’s management has warned about persistent supply chain bottlenecks. Chief Executive Justin Hotard described the current environment as an “AI super-cycle,” but cautioned that shortages of memory chips, particularly in the DRAM segment, are likely to persist into 2027. The company also faces constraints in sourcing indium phosphide wafers, critical components for its optical networking business. These bottlenecks threaten to slow the conversion of the €2.8 billion order backlog into actual sales, even as Nokia’s AI and cloud order book is described internally as “lumpy” — irregular and difficult to forecast.
Should investors sell immediately? Or is it worth buying Nokia?
The market’s focus has shifted squarely to these execution risks. Nokia’s shares have now fallen 46.16% from their all-time high of €14.97 reached in early June. The 50-day moving average, currently at €11.64, has flipped from support to formidable resistance — the stock now trades 30.76% below that level. The 14-day relative strength index has dropped to 29.5, a reading that technically signals oversold conditions. The 200-day moving average at €7.84 looms as the last line of defense; the stock sits just 2.84% above it. A break below that level could trigger further selling, while holding it might confirm that the recent rout has been overdone.
Nokia has tried to reassure the market. It raised its full-year 2026 operating profit guidance to a range of €2.1 billion to €2.6 billion. The company also trimmed its capital expenditure plans for the year to between €800 million and €900 million, down from the previously guided €900 million to €1 billion — a move that can be interpreted either as prudent discipline or as a sign that the company is struggling to keep pace with AI demand. For the third quarter, Nokia expects operating profit to come in at a similar level to the second quarter, offering no obvious near-term catalyst for a sentiment shift.
Despite the recent carnage, the stock still trades 44.19% higher year-to-date and has gained a remarkable 116.90% over the past twelve months. The bull case rests on the assumption that the cash flow will normalize once seasonal factors fade, and that roughly half of the AI order backlog will be converted into revenue within the next twelve months, carrying the growth story well into 2027. The bear case, meanwhile, warns that if supply chain constraints persist and restructuring costs outpace margin gains, negative cash flow could become a structural feature rather than a temporary blip.
Nokia at a turning point? This analysis reveals what investors need to know now.
The next major test comes with third-quarter results. Nokia has guided for sequential revenue growth of 3% to 7%. If cash flow turns positive by then, the recent sell-off may prove to have been an overreaction. If it remains in the red, the skepticism that has gripped the stock over the past month is likely to deepen. With an annualized 30-day volatility of 66.88%, investors should brace for more wild swings in either direction.
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Nokia Stock: New Analysis - 27 July
Fresh Nokia information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
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