Nokia’s AI Boom Meets a Brutal Reality Check: Restructuring Clouds a Record Quarter
Published on 07/24/2026 at 14:12 | Redaktion boerse-global.de
The numbers coming out of Nokia’s second quarter are the kind that typically send a stock soaring. AI and cloud revenue more than doubled, the order book swelled to a record €2.8 billion, and operating profit beat analyst expectations by a comfortable margin. Yet the market’s reaction told a very different story. Shares tumbled 5.34 percent on the day of the results and have now shed nearly 30 percent over the past month, landing at €8.56. The disconnect between operational strength and share price weakness isn’t a mystery — it’s the price of a radical corporate overhaul.
The AI Engine Is Running Hot
Under CEO Justin Hotard, who took the helm last year, Nokia is betting the farm on becoming a pure-play AI infrastructure provider. That bet is already paying off in hard numbers. Net revenue from the AI and Cloud segment surged 105 percent year-on-year to €446 million in the second quarter of 2026, fueled by a record order intake of €2.8 billion. Hotard describes this as part of an “AI super-cycle,” with cloud providers scrambling for data-center connectivity and scale-out network capacity in a supply-constrained market.
The broader network infrastructure division also delivered double-digit growth, with Optical Networks climbing 20 percent and IP Networks advancing 16 percent. Fixed Networks slipped 2 percent, dragged down by weaker sales of optical network terminals, but the overall picture was one of broad-based strength. Comparable operating profit rose 18 percent to €434 million, well above the consensus estimate of roughly €382 million. The comparable gross margin improved 70 basis points to 46.0 percent, helped by a richer product mix and synergies from the Infinera acquisition.
The Restructuring That Spooked the Market
So why the sell-off? Nokia is simultaneously executing a painful strategic retreat from non-core businesses. The company has reclassified its Fixed Wireless Access CPE unit and the Enterprise Campus Edge division as discontinued operations. The FWA-CPE business is already under a sale agreement with Inseego, and management considers a disposal of the Campus Edge unit highly probable.
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This restructuring has a direct and confusing impact on the financial guidance. Nokia raised its 2026 comparable operating profit forecast to a range of €2.1 billion to €2.6 billion, up from €2.0 billion to €2.5 billion. But the increase is almost entirely mechanical — it reflects a narrower base of continuing operations, not improved underlying performance. In fact, the reclassification alone shaves roughly €100 million off the previous guidance when measured on a like-for-like basis. The management has been careful to stress that the higher headline number does not signal additional operational momentum.
The Cash Flow Problem That Won’t Go Away
Investors also had to digest a free cash flow figure that turned deeply negative. Nokia reported a free cash outflow of €732 million for the quarter. The company attributes this to the seasonal payment of annual employee bonuses — a recurring pattern that management insists does not undermine the health of the business. But for a stock already under pressure from restructuring uncertainty, a cash drain of that magnitude was the last thing shareholders wanted to see.
The dividend policy remains unchanged at €0.04 per share quarterly, with a record date of July 28 and payment on August 6. That offers some comfort to income-oriented holders, but it does little to address the broader anxiety about timing and execution.
A Chart That Screams Caution
The technical picture reinforces the market’s nervousness. The 14-day relative strength index sits at 32.3, flirting with oversold territory. The annualized 30-day volatility has spiked to 65.25 percent, reflecting deep uncertainty about how quickly Nokia can convert its record order book into recognized revenue. The stock now trades 43 percent below its 52-week high of €14.97, reached in early June.
Yet the long-term view is far more forgiving. Over the past twelve months, Nokia shares have still gained 131.81 percent. The market is effectively weighing near-term restructuring costs and execution risk against the long-term promise of the AI infrastructure bet. For now, the short-term concerns are winning.
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The Warning That Comes With the Record
Hotard himself has tried to temper expectations. The €2.8 billion order haul, he cautions, is “irregularly distributed” — a record quarter does not guarantee a repeat performance. Nokia expects roughly half of that order volume to convert into revenue within the next twelve months, but the lumpy nature of large AI infrastructure contracts means the path to consistent growth will be anything but smooth.
The next earnings season will be the real test. If Nokia can demonstrate that the order conversion is on track and the restructuring costs are fading, the market may finally reward the underlying strength. Until then, the stock is caught between a booming AI business and the messy reality of a company tearing itself apart to get there.
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