Nokia’s €2.8 Billion AI Order Book Can’t Stop the Bleeding — Here’s Why
Published on 07/30/2026 at 07:42 | Redaktion boerse-global.de
The Nokia that reported second-quarter results this week is a company of stark contradictions. Its AI-infrastructure business is booming, with orders piling up faster than it can fulfill them. Yet its stock has been gutted, shedding more than half its value from the June peak and plunging deep into oversold territory. Reconciling those two realities is the central challenge for anyone trying to make sense of the Finnish telecom-equipment maker right now.
The numbers tell the split story plainly. Nokia’s net sales to AI and cloud customers surged 105% year over year in the second quarter, and the company booked €2.8 billion in new orders from that segment alone — a figure that dwarfs current revenue run rates and points to a fat backlog stretching well into 2027. The group’s comparable operating profit rose 18% to €434 million on total revenue of €4.82 billion, which was up 8%. Management even raised its full-year profit guidance to a range of €2.1 billion to €2.6 billion, up from the previous €2.0 billion to €2.5 billion target.
And yet, the stock closed Wednesday at €7.36, down 6.55% on the day and 50.84% below the year’s high of €14.97 set on June 3. Over the past 30 days, the shares have lost nearly 37%. The 14-day relative strength index now sits at 26.1 — well inside oversold territory, a level that historically has preceded at least short-term stabilization.
Why the market isn’t buying the AI story — yet
The sell-off looks, at first glance, like a textbook “sell the news” event following a strong quarter. But there’s more to it. CEO Justin Hotard warned that a shortage of memory chips will persist through 2027, calling semiconductors the industry’s single biggest bottleneck in an interview with Bloomberg. That kind of multiyear supply constraint weighs on valuation multiples regardless of how robust order intake looks in the short term.
Should investors sell immediately? Or is it worth buying Nokia?
The market got a preview of the pain on July 14, when rival Ericsson’s stock crashed nearly 12% after reporting the same cost inflation on memory chips, dragging the entire telecom-equipment sector lower. Nokia’s response — the acquisition of an NXP Semiconductors chip fabrication facility in Arizona — makes strategic sense as a long-term hedge but does nothing to ease the immediate margin pressure. It also adds integration risk to an already complicated transformation story.
The cash-flow picture is the real worry
What concerns some analysts more than the share price decline is what’s happening on the balance sheet. Working capital consumed roughly €1.15 billion in the second quarter, with €370 million of that tied up in inventories alone. Free cash flow for the first half landed at negative €104 million, a dramatic swing from the positive €809 million Nokia recorded in the same period last year.
Add to that the restructuring program, which carries expected costs of around €800 million for 2026, with cash outflows projected between €700 million and €800 million. Management insists it remains on track to hit its full-year cash-flow target, but that puts enormous pressure on the second half to prove that the record AI order book can actually be converted into cash — not just sit as a number in the backlog while inventories and receivables keep swelling.
A transformation that costs money to make money
CEO Justin Hotard is steering Nokia through a fundamental identity shift. The company is moving away from its legacy as a mobile-network equipment supplier and toward a role as a provider of the optical networking and IP routing gear that forms the plumbing for AI data centers. The network infrastructure segment, which houses those businesses, grew 12% in the second quarter, powered by a 20% jump in optical networks.
But the restructuring needed to complete that pivot comes with near-term pain. The €800 million program is designed to align the corporate structure more tightly with the higher-margin network infrastructure business. In the short run, it burns cash and erodes confidence. In the long run, it’s meant to strengthen the very divisions that are already collecting the AI orders.
The guidance adjustment that spooked some investors was largely technical — Nokia reclassified certain legacy businesses as discontinued operations — but it added to the sense of uncertainty. The company confirmed its operating-profit forecast of €2.1 billion to €2.6 billion, yet the market chose to focus on the supply-chain headwinds and the cash drain rather than the order book.
Nokia at a turning point? This analysis reveals what investors need to know now.
Oversold, but not necessarily a bargain
Technically, the stock is deep in oversold territory with an RSI of 26.1 and an annualized 30-day volatility above 68%. That combination often signals that the immediate selling pressure is exhausted and a bounce is plausible. Traders betting on a short-term recovery have a reasonable case.
The fundamental question is different. Can Nokia convert its €2.8 billion AI order backlog into revenue and margin fast enough to overcome the macro uncertainty, the chip shortage, and the cash burn that are currently weighing on the stock? With a market capitalization of €43.7 billion, the market is already valuing Nokia very differently than it did during the rocky early 5G years.
The answer won’t come in the next few trading sessions. It will emerge over the coming quarters as investors watch whether the record order intake translates into cash — or continues to disappear into inventory and receivables. Until then, Nokia remains a stock for investors with strong nerves and a willingness to separate short-term price swings from the underlying business trajectory.
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