Nokia's Pre-Earnings Rally Faces a Steep Second-Half Profit Climb
Published on 07/22/2026 at 07:42 | Redaktion boerse-global.de
Nokia shares staged a sharp rebound on Tuesday, climbing 6.25 percent to close at €9.41, as a flurry of positive catalysts converged just ahead of the Finnish network equipment maker's second-quarter earnings release on July 23. The rally, which lifted the stock from last week's low of €8.65, was fueled by the commercial launch of an AI-RAN platform developed with Nvidia, a pair of analyst upgrades from Scandinavian banks, and a broader surge in semiconductor stocks following a record order book at Super Micro Computer.
SEB Equities raised its rating on Nokia to Buy with a €12 price target, while Danske Bank followed suit with a €14 target. On the social trading platform Stocktwits, discussion volume around the stock jumped 61 percent week-over-week, with sentiment turning decisively bullish. The Philadelphia Semiconductor Index's strong advance added further tailwinds, pulling infrastructure names like Nokia higher alongside the chip sector.
Yet beneath the surface, the numbers tell a more demanding story. Analysts expect Nokia to report second-quarter revenue of €4.822 billion and operating profit of €376 million, implying a margin of 7.8 percent. The real pressure, however, is concentrated in the second half. After a first-half margin of just 7.0 percent, Nokia would need to deliver a staggering 14.8 percent margin in H2 to hit its full-year target — meaning roughly 72 percent of total annual profit must be generated in the final six months. CEO Justin Hotard has said demand has "clearly accelerated," but rival Ericsson warned that rising memory-chip costs, driven by surging AI demand, could spill over into Nokia's margin ambitions.
The AI Business Is Growing Fast, but Europe Lags Behind
Nokia's AI and cloud division grew 49 percent in the first quarter and now accounts for 8 percent of group revenue, with the addressable market expected to expand at 27 percent annually through 2028. The new AI-RAN platform, designed to make mobile networks AI-ready, positions Nokia squarely in this growth arena alongside Nvidia. Yet Hotard warned in April that Europe risks falling behind the US and China in AI data-center infrastructure, citing insufficient investment and capacity constraints.
Should investors sell immediately? Or is it worth buying Nokia?
The stock's recent trajectory has been anything but smooth. Tuesday's bounce comes after a brutal 30-day stretch in which Nokia lost roughly a quarter of its value, sliding from a 52-week high of €14.97 on June 3 to as low as €8.65 last week. Despite the pullback, the shares still trade 21 percent above their 200-day moving average of €7.77, suggesting the long-term uptrend remains intact even as short-term volatility has spiked. The relative strength index stands at 37.5 — indicating the stock has cooled significantly from its June peak but has not yet entered oversold territory. With annualized 30-day volatility at 68 percent, the shares remain extremely sensitive to news flow.
A Portfolio of Contracts, but Execution Is Key
Beyond the earnings headline, Nokia has been quietly building its commercial pipeline. The company signed a 5G expansion deal with Taiwan Mobile to accelerate AI-native mobile networks in Taiwan, while Nokia Defense deepened its partnership with NestAI to deliver AI-powered capabilities for NATO-compatible secure networks. These wins bolster the growth narrative, but the market is waiting for them to translate into measurable profit improvement.
The competitive landscape remains intense. Arista Networks is challenging Nokia in the AI data-center space, while Ericsson remains the dominant rival in traditional telecom infrastructure. Currency effects are unlikely to distort the picture this quarter, with the euro-dollar exchange rate close to Nokia's planning assumptions, leaving operational performance as the sole driver of the numbers.
Nokia at a turning point? This analysis reveals what investors need to know now.
When Nokia reports on Wednesday morning Finnish time, followed by an analyst webcast in the afternoon, the focus will be less on top-line growth and more on sequential net sales momentum — guided at 5 to 9 percent — and the trajectory of comparable operating margins. The market consensus places second-quarter earnings at roughly 16 percent of the full-year profit forecast, at the high end of Nokia's historical seasonal range of 12 to 16 percent. Missing that mark would likely be read as a warning signal for the remainder of the year.
The question hanging over the stock is whether the AI transformation story is finally crystallizing in hard numbers — or whether Tuesday's rally is merely a brief respite before the next leg of selling pressure. With 72 percent of annual profit still to be earned in the second half, the margin for error is razor-thin.
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