Nokia’s Chip Warning Overshadows a Beat — Even as AI Orders Hit €2.8 Billion
Published on 07/25/2026 at 03:11 | Redaktion boerse-global.de
Nokia delivered a second-quarter earnings beat on Friday that would normally send a stock higher. Instead, the shares tumbled 6.32 percent to €8.07 in Helsinki, extending a sell-off that has now erased nearly half the value from the Finnish network equipment maker’s 52-week peak.
The culprit wasn’t the numbers themselves — they were broadly strong — but a single cautionary note from CEO Justin Hotard. He warned that shortages of memory chips could persist into 2027, effectively capping how quickly Nokia can convert its bulging order book into revenue. For a company riding the artificial intelligence infrastructure wave, that timeline landed like a cold dose of reality.
A Profit Beat Buried by Supply Constraints
On an operating basis, Nokia had plenty to cheer about. Comparable operating profit rose 18 percent year-on-year to €434 million, well ahead of the consensus estimate of roughly €382 million. The comparable operating margin improved 70 basis points to 9.0 percent, while the comparable gross margin reached 46.0 percent. Currency-adjusted net sales climbed 9 percent.
The headline operating profit, however, swung to a loss after Nokia booked restructuring charges that are expected to total around €800 million for the full year. Free cash flow in the quarter was negative €732 million, a figure that added to investor unease despite the underlying operational improvements.
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The €2.8 Billion AI Order Gap
The most striking figure in the report was the €2.8 billion in orders Nokia booked from AI and cloud customers — more than double the level of a year ago. Yet actual revenue from that segment came in at just €446 million for the quarter, meaning orders outstripped realized sales by a factor of more than six. The company said roughly half of those AI and cloud orders would convert to revenue within twelve months, but for a market already impatient with execution timelines, that lag felt uncomfortably long.
The disconnect explains why investors looked past the 105 percent jump in AI and cloud revenue and focused instead on Hotard’s chip warning. Demand, he said, is robust — but supply remains the bottleneck. “The AI supercycle is real,” he told analysts, “but it is constrained by component availability.”
Network Infrastructure Holds Up
Outside the AI spotlight, Nokia’s network infrastructure division delivered a 12 percent revenue increase, led by optical networks (up 20 percent) and IP networks (up 16 percent). The broader portfolio is benefiting from upgrades in telecom and enterprise networks, though the pace of spending from traditional telecom customers remains uneven.
Management raised its full-year guidance for comparable operating profit to a range of €2.1 billion to €2.6 billion, signaling confidence in the second half. The third-quarter outlook calls for sequential revenue growth of 3 to 7 percent. The next quarterly update is scheduled for October 22.
Analysts Split on the Path Forward
The market’s reaction has divided sell-side opinion. UBS cut its price target from €11 to €9.65, keeping a Neutral rating, arguing that the AI story is already priced in and that pressure on telecom capital expenditure budgets will persist. Bank of America took the opposite view, reiterating a Buy rating and lifting its target to €16, projecting that AI order intake could double to roughly €2 billion per quarter by 2027, with revenue following suit.
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Ă…landsbanken upgraded Nokia from Negative to Neutral, noting that the adjusted operating profit beat was genuine even if one-off items helped. The bank also pointed out that the third-quarter guidance sits around 20 percent below market expectations, tempering any near-term enthusiasm.
A Painful Correction in a Longer Rally
From its 52-week high of €14.97 on June 3, Nokia has now fallen 46 percent. The 14-day relative strength index has dropped to 29.6, a level that typically signals oversold conditions and often precedes a stabilization. But context matters: the stock was trading as low as €3.45 in August 2025, meaning it has still more than doubled from that trough. On a year-to-date basis, Nokia remains up roughly 45 percent.
The current drawdown looks less like a collapse and more like a sharp correction of an extraordinary rally — one fueled by AI hype that is now colliding with the mundane realities of semiconductor supply chains. The €2.8 billion order book provides a cushion for the quarters ahead, but as long as the chip narrative dominates headlines, Nokia’s share price may struggle to regain its footing until those orders start turning into cash at a faster clip.
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