Nokia’s Arizona Chip Deal and Earnings Beat Fail to Halt the Sell-Off
Published on 07/24/2026 at 22:02 | Redaktion boerse-global.de
Nokia’s stock endured another bruising session on Friday, sliding 5.78 percent to €8.12, as investors looked past a solid earnings beat and a strategic semiconductor acquisition to focus on persistent supply-chain risks and a yawning gap between AI orders and actual revenue. The decline extended a brutal month that has wiped more than 33 percent from the Finnish telecom-equipment maker’s market value.
The sell-off came despite Nokia reporting second-quarter comparable operating profit of €434 million, a 18 percent year-on-year increase that comfortably topped the consensus estimate of roughly €382 million. Net revenue rose 9 percent on a currency-adjusted basis, while the comparable operating margin improved 70 basis points to 9.0 percent. Yet the headline numbers masked a deeper concern: reported operating profit swung negative after the company booked restructuring charges of around €800 million for the full year, and free cash flow came in at minus €732 million for the quarter.
A Strategic Bet on US Chip Capacity
In a move designed to shore up its optical-networking business — now central to Nokia’s artificial-intelligence infrastructure push — the company announced it is acquiring a semiconductor manufacturing site in Chandler, Arizona, from NXP Semiconductors. The facility will complement existing investments in indium-phosphide chip production in San Jose, California. Chief Executive Justin Hotard told Bloomberg that memory chips represent the industry’s biggest bottleneck, though he pushed back on fears of an AI bubble, insisting demand remains robust and supply constraints will persist.
The Arizona deal and the earnings release arrived simultaneously, but the market’s reaction was unequivocally negative. A broader sell-off in technology and semiconductor stocks added to the pressure, with analysts pointing to already priced-in AI optimism and supply-chain warnings as catalysts for the reversal.
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The AI Order-to-Revenue Gap That Spooked the Market
Perhaps the most troubling detail for investors lay in the AI and cloud segment. Nokia reported order intake of €2.8 billion in the quarter, yet actual revenue from the division came in at just €446 million — meaning orders outstripped realized sales by more than six times. While AI and cloud revenue more than doubled year on year, climbing 103 percent to represent 9.3 percent of group sales, the slow conversion of the bulging order book into invoiced revenue clearly unsettled traders. Management said roughly half of those AI and cloud orders should be recognized as revenue within twelve months.
Elsewhere in the business, the picture was more encouraging. Network infrastructure grew 12 percent, powered by a 19 percent jump in optical networks and a 15 percent rise in IP networking. Mobile infrastructure added 6 percent. Hotard described the strategy as “delivering” and pointed to a sustained AI super-cycle, though he cautioned that memory-chip shortages could persist into 2027.
Analysts Split on What Comes Next
Wall Street and European analysts offered sharply divergent takes on Nokia’s prospects. Bank of America raised its price target to €16 and reiterated a buy rating, arguing that the pace of AI orders could double to roughly €2 billion per quarter by 2027, with revenue doubling over the same period. UBS took the opposite view, cutting its target to €9.65 and maintaining a neutral stance, citing the risk that good news from the AI business is already priced in and that pressure on telecom customers’ capital budgets will persist.
Finland’s Ålandsbanken upgraded Nokia from negative to neutral, noting that adjusted operating profit beat consensus despite one-off benefits. However, the bank also flagged that the third-quarter guidance came in roughly 20 percent below market expectations. After a drawdown of more than 40 percent from the stock’s 52-week high of €14.97, the bank considers the valuation reasonable but said meaningful upside depends on stronger AI and cloud revenue growth.
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Technical Signals Point to Oversold Territory
The stock’s 14-day relative strength index has dropped to 29.8, a level chart analysts typically interpret as signaling oversold conditions and a potential bounce. Yet the fundamental picture remains clouded. Nokia reaffirmed its full-year 2026 guidance for comparable operating profit of between €2.1 billion and €2.6 billion, and forecast sequential revenue growth of 3 to 7 percent in the third quarter. The next set of quarterly results is due on October 22.
Despite the recent carnage, Nokia shares are still up more than 45 percent since the start of the year — a stark reminder of how powerful the AI-driven rally was before the current correction took hold. Whether the improved guidance and the Arizona chip deal can offset near-term anxiety over memory-chip costs and a sluggish legacy telecom business will be the key question for the weeks ahead.
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