Nokia's Split Personality: AI Momentum Meets a Cash Flow Reality Check
Published on 08/01/2026 at 10:21 | Redaktion boerse-global.de
The Finnish telecom equipment maker finds itself caught between two very different stories. One narrative points to a booming artificial intelligence business and a credit rating agency warming to the company's prospects. The other tells of a balance sheet under strain and a share price that has given back nearly half its recent gains in a matter of weeks.
Shares closed Friday at EUR 7.93, essentially flat on the day. That stability, however, masks a brutal stretch: the stock has shed roughly 30 percent over the past 30 days, retreating sharply from the 52-week high of EUR 14.97 reached in early June. Even after the pullback, Nokia remains up more than 121 percent on a twelve-month basis.
The Cash Flow Conundrum
The market's anxiety centers on a number that tells a starkly different story from the headline results. Nokia's free cash flow swung to negative EUR 732 million in the second quarter, dragging the first-half figure to minus EUR 104 million — a dramatic reversal from the plus EUR 809 million recorded in the same period last year.
The culprit is working capital. Nokia plowed roughly EUR 1.15 billion into working capital during the quarter, including EUR 370 million tied up in inventory. Net liquidity consequently dropped 27 percent in just three months, settling at EUR 2.78 billion.
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The operational picture, by contrast, looks considerably healthier. Comparable operating profit rose 18 percent year-on-year to EUR 434 million in the second quarter, comfortably beating the EUR 382 million consensus estimate. Revenue climbed 9 percent on a currency-adjusted basis, powered by the AI and cloud division, where sales doubled to EUR 446 million on the back of new orders worth EUR 2.8 billion.
Yet the reported operating result tells a less flattering tale, swinging to a loss of EUR 50 million. The company also faces roughly EUR 800 million in expected restructuring and integration costs for the full year 2026, a burden that weighs on the earnings outlook even as the growth engine hums.
A Credit Nod of Approval
Against this mixed backdrop, S&P Global Ratings delivered a vote of confidence. The agency lifted its outlook on Nokia from "stable" to "positive" while affirming the BBB- long-term rating. S&P sees the potential for an actual upgrade within the next 24 months, citing the growing heft of AI and cloud infrastructure in Nokia's business mix — a segment that increasingly offsets persistent weakness in the traditional mobile networks operation. The rating agency also praised management's cost discipline during the transition.
Analysts Split, Insiders Trim
Wall Street's response to the quarterly numbers has been anything but uniform. Deutsche Bank cut its price target on July 27 from EUR 13.50 to EUR 11.50 but maintained its buy recommendation. Goldman Sachs holds a neutral stance, while Barclays remains cautious with an underweight rating. On the bullish end, Bank of America raised its target from USD 18 to USD 18.50, arguing that the record AI order intake outweighs the softer near-term guidance.
Institutional positioning reflects the same divergence. Oaktree Capital Management reduced its Nokia stake by 40 percent during the first quarter, leaving it with 11.2 million shares and dropping Nokia to the 19th spot in the firm's portfolio.
The Technical Picture
Chart watchers see a stock that may be running out of selling steam. The 14-day relative strength index sits at 33.3, inching toward the oversold threshold of 30. The share price trades roughly 29 percent below its 50-day moving average of EUR 11.21, and the annualized 30-day volatility of 68.44 percent underscores just how turbulent trading has been since the earnings release.
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All eyes now turn to the 200-day moving average at EUR 7.93 — the level where shares closed Friday. Defending that line could provide the foundation for a rebound; losing it might open the door to a slide toward the 52-week low of EUR 3.45. The coming week's trading will likely determine which path unfolds.
A Dividend on the Way
Shareholders have a small payout to look forward to. Following the dividend ex-date on July 28, Nokia will distribute EUR 0.04 per share on August 6. That payment forms part of a total distribution of up to EUR 0.14 per share for fiscal 2025, approved by the annual general meeting in April and paid out in four installments.
The fundamental question hanging over Nokia is whether the working capital drain normalizes quickly enough to reassure investors that the recent sell-off was an overreaction rather than the start of a prolonged downturn. The AI order book offers genuine cause for optimism, but the balance sheet strain is equally real. For now, the market seems content to wait for proof that the two sides of Nokia's story can be reconciled.
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