Nokia’s Pre-Earnings Plunge Highlights the Cost of AI-Fueled Anxiety: An 18% Weekly Rout Tests Analyst Conviction

Nokia’s shares suffered their steepest weekly decline in months, tumbling 18.31% over seven sessions to close at €8.90 on Friday. The stock now sits 40.55% below its June 3 peak of €14.97, erasing roughly €13.5 billion in market value since the start of July. Friday’s 2.39% drop came amid a broader tech sell-off that pulled the Nasdaq down 1.85% and the S&P 500 by 1.11% — but Nokia’s losses far outpaced the indices, signaling company-specific headwinds.

The trigger for the rout originated in Sweden. Ericsson’s CFO Lars Sandström warned that rising memory prices, driven by surging AI hardware demand, are squeezing the entire telecom equipment industry. CEO Börje Ekholm added that his company is “not immune” to the inflationary pressure, which he expects to build through 2027. Nokia itself has issued no such warning, yet investors have quickly priced in the risk, causing Nokia to underperform Ericsson by roughly six percentage points since July 9. The market is now asking whether the same cost pressures will mar Nokia’s own results.

Those results are due on July 23, and the stakes could not be higher. In the first quarter, Nokia reported a 49% surge in AI cloud revenue and booked €1 billion in new orders. Management has guided for 12-14% revenue growth in Network Infrastructure for 2026, with comparable operating profit between €2.0 billion and €2.5 billion. A new AI-RAN platform, set for commercial launch in 2027, is meant to cement the company’s position in the AI networking space. Meanwhile, a freshly opened AI Networking Innovation Lab in Sunnyvale, California — in partnership with AMD, Keysight, and Nscale — is working on validated designs for AI training and inference. On the consumer front, HMD Global has launched Nokia-branded 4G feature phones equipped with a Sikey AI assistant, free for the first 180 days and then available via subscription.

Should investors sell immediately? Or is it worth buying Nokia?

While the company pushes its AI agenda forward, the mood in the share register remains deeply cautious. The relative strength index has fallen to 31.5, a classic oversold reading, but the 30-day annualized volatility has spiked to 66.61%. Implied volatility around the earnings date is even higher at 79.62, suggesting daily swings of roughly $0.52. That nervousness stands in stark contrast to Wall Street’s official stance: the average analyst price target sits at $14.67, a chasm away from the current €8.90. JPMorgan raised its target to $21 on June 12, and Argus upgraded the stock to Buy with a $15 target in late April — both well above even the pre-selloff levels.

The question for July 23 is whether Nokia can convince the market that its cost exposure is manageable. Analysts expect second-quarter earnings per share of $0.07 on revenue of $5.59 billion, compared to $0.04 and $5.15 billion a year earlier. The gap between those forecasts and the stock’s recent trajectory suggests that valuation has already been heavily discounted — but so has investor patience. Nokia’s AI story is compelling on paper, but the market wants proof that the margin math adds up before it renews its faith. One earnings report could either bridge that gap or widen it.

Ad

Nokia Stock: New Analysis - 19 July

Fresh Nokia information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

Read our updated Nokia analysis...

en | FI0009000681 | NOKIA’S | boerse | 69799092 |