Nokia’s Restructuring Bill Wipes Out Net Profit Even as AI Demand Drives a Record Order Book
Published on 07/24/2026 at 03:22 | Redaktion boerse-global.de
Nokia posted a second-quarter earnings beat that would normally send a stock higher, but the Finnish telecom equipment maker’s shares ended Thursday sharply lower as investors focused on a collapsing net profit, a deeply negative cash flow, and a management warning that the AI-driven order surge will take time to convert into revenue.
The stock tumbled 5.24 percent to €8.60 in Helsinki, making it one of the worst performers on the OMXH index, which closed 1.9 percent lower. The decline came despite a comparable operating profit that jumped 18 percent year-on-year to €434 million, easily clearing the LSEG consensus estimate of €382 million. Revenue rose 8 percent to €4.82 billion, or 9 percent on a currency-adjusted basis.
The disconnect between the headline numbers and the market’s reaction stems from the fine print. Nokia’s reported net profit collapsed to just €5 million from €96 million a year earlier, hammered by €390 million in restructuring charges in the quarter alone. The company expects total restructuring costs of €800 million for the full year 2026, including €200 million for job cuts in Europe and €350 million for the accelerated integration of Nokia Shanghai Bell. The reported operating margin slipped to minus 1.0 percent, while free cash flow came in at negative €732 million, which Nokia attributed to seasonal effects.
AI Orders Hit a Record, but Conversion Is Slow
The bright spot — and the reason Nokia raised its full-year comparable operating profit guidance to a range of €2.1 billion to €2.6 billion, up from €2.0 billion to €2.5 billion — was the AI and cloud business. Revenue from that division nearly doubled to €446 million, a 105 percent surge. Order intake in the segment hit a record €2.8 billion in the first half, already exceeding the total order volume for all of 2025, according to multiple reports.
Should investors sell immediately? Or is it worth buying Nokia?
CEO Justin Hotard described the demand environment as an “AI supercycle,” adding that supply constraints are now the main bottleneck. Indium phosphide components remain the biggest delivery risk, he said, with higher costs being partially passed on to customers. JPMorgan noted that order intake is running “dramatically higher” than previously assumed.
Yet Hotard also cautioned that the growth in AI and cloud orders is “lumpy,” with only about half of current orders expected to convert into actual revenue within twelve months. For the third quarter, Nokia guided for a slightly lower gross margin, after a pull-forward effect from software sales boosted the Q2 margin to 49.3 percent.
Divestitures Signal a Sharper Strategic Focus
Alongside the quarterly results, Nokia confirmed it has reached a binding agreement to sell its Fixed Wireless Access customer-premises equipment business and is close to a deal for its enterprise campus edge unit. Both divisions had been classified as “portfolio businesses” since the start of 2026 and no longer fit the company’s long-term strategy of focusing on high-performance networking for the AI era.
The divestitures have already been reflected in the revised full-year guidance, which excludes the two units. The restructuring program, which also includes the integration of the China joint venture and additional adjustments in Europe, is part of a broader cost-saving effort that began in 2023.
Chip Manufacturing Expansion and AI-RAN Push
To address the supply bottlenecks, Nokia is expanding its own semiconductor manufacturing in the United States. A facility in San Jose is set to begin volume production in the fourth quarter of 2026, while a plant in Pennsylvania will see its testing and packaging capacity increased tenfold. Nokia also plans to lease and eventually acquire an NXP fab in Chandler, Arizona, with full ownership targeted by early 2029.
Nokia at a turning point? This analysis reveals what investors need to know now.
In mobile infrastructure, Nokia and Nvidia have unveiled the first commercial AI-RAN platform. Pilot projects are expected to start in late 2026, with commercial rollout planned for 2027. T-Mobile will serve as the lead pilot partner. Nokia aims to more than double spectral efficiency by 2028.
Stock Deep in Correction Despite Year-to-Date Gains
The stock has lost nearly a quarter of its value over the past 30 days and now trades roughly 40 percent below its early June high of €14.97. At €8.60, the shares are still up 53.92 percent since the start of the year, but the recent slide has pushed the 14-day relative strength index to 32.6, approaching oversold territory.
Juuso Kenkkilä, an investment manager at OP-Pohjola, argued that Nokia is once again becoming a fast-growing company, with the decisive transformation now underway. But for the moment, the market remains skeptical, weighing the operational progress against the hefty restructuring bill and the uncertain pace of AI revenue conversion.
Ad
Nokia Stock: New Analysis - 24 July
Fresh Nokia information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
Disclaimer regarding our articles: No investment advice, no buy or sell recommendation. Information on prices, companies, and markets is provided without guarantee; changes are possible at any time. Stock market transactions can lead to substantial losses. Our articles are created and reviewed in whole or in part automatically with the support of AI.
