Nokia’s €2.8 Billion AI Order Haul Can’t Mask a €732 Million Cash Leak
Published on 07/24/2026 at 11:12 | Redaktion boerse-global.de
The disconnect between Nokia’s operational momentum and its stock price has rarely been wider. The Finnish telecom equipment maker posted a second-quarter earnings beat, a record AI order book, and a restructuring strategy that sharpens its focus on the most lucrative parts of the business — yet the shares are being pummelled as investors fixate on a cash drain and the uncertainty of a corporate overhaul.
The stock fell 3.6% to €8.30 on Friday, extending a slide that has now erased more than 31% of its value over the past 30 days. At its current level, the equity trades 44% below the 52-week high of €14.97 reached on June 3. The secondary article recorded a sharper single-day drop of 5.34% to €8.61 for the previous session, underscoring the volatility that has gripped the name.
AI Orders Double, but the CEO Warns of Lumpiness
Under CEO Justin Hotard, who took the helm last year, Nokia is betting heavily on artificial intelligence infrastructure. The bet is paying off in orders. The company booked €2.8 billion in new AI and cloud contracts during the quarter — a record for the group — while revenue in the AI & Cloud segment more than doubled year-on-year to €446 million.
The comparable operating profit climbed 18% to €434 million, comfortably ahead of the analyst consensus of roughly €382 million. Net sales reached €4.82 billion, up 9% on a currency-adjusted basis. The comparable gross margin improved by 70 basis points to 46.0%, helped by a more favourable product mix and synergies from the Infinera acquisition.
Should investors sell immediately? Or is it worth buying Nokia?
Yet Hotard himself threw cold water on extrapolating the order momentum. The company cautioned that booking patterns in this market are inherently irregular — a record quarter does not guarantee a repeat. Roughly half of the current order backlog is expected to convert into actual revenue over the next twelve months, management said, with supply constraints on indium phosphide and memory components acting as a brake on the industry.
Restructuring Spooks Investors
Nokia is simultaneously shedding non-core assets to concentrate on AI and cloud infrastructure. The Fixed Wireless Access (FWA) device business and the Enterprise Campus Edge unit have been reclassified as discontinued operations. A buyer has already been found for the FWA division: US-based Inseego, which will pay Nokia in shares, leaving the Finnish group with an 11.1% stake in the company. The deal is expected to close in the fourth quarter of 2026. A sale of the Campus Edge business is considered “highly probable” by management.
The reclassification forced a technical adjustment to Nokia’s full-year guidance. The company now expects comparable operating profit of between €2.1 billion and €2.6 billion for 2026 — roughly €0.1 billion lower than the previous forecast, purely due to the changed scope of the group. The move unsettled investors who see a company shrinking its way to a cleaner profile, even if the strategic logic is sound.
The Cashflow Conundrum
The most immediate source of investor anxiety is the cashflow statement. Nokia posted a negative free cashflow of €732 million in the second quarter, a figure that sits awkwardly alongside the earnings beat. Management attributed the shortfall to seasonal effects: the annual payout of employee bonuses and a deliberate inventory build to support future growth.
The comparable gross margin may have improved, but the cash conversion ratio for the full year is now expected to land at the lower end of the 55% to 75% target range. That caution, combined with warnings from competitors that rising AI demand is pushing up memory chip prices and squeezing margins across the networking equipment sector, has weighed heavily on sentiment.
Nokia at a turning point? This analysis reveals what investors need to know now.
Technicals Suggest a Bounce, But the Trend Is Ugly
The 14-day relative strength index has fallen to 30.8, a level that typically signals an oversold condition and the potential for a short-term rebound. The secondary article recorded a slightly higher RSI of 32.6, but both readings point to exhaustion among sellers.
The longer-term picture, however, remains remarkably strong. The stock is still up nearly 49% year-to-date and has gained more than 123% over the past twelve months. The question that investors are wrestling with is whether the record AI order book will eventually translate into sustainable cash generation — or whether the lumpy nature of the business and the costs of restructuring will continue to cap the upside for a stock that has already run hard.
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