Nokia Faces a Steep Climb: AI Orders Surge While 2026 Guidance Demands a Record Fourth Quarter
Published on 08/03/2026 at 05:52 | Redaktion boerse-global.de
The disconnect playing out at Nokia right now is hard to miss. The Finnish telecom equipment maker's shares have been battered over the past month, shedding roughly 29 percent of their value, even as the company's AI and cloud business posts triple-digit growth. On Friday, the stock closed at €7.93, essentially flat on the day — but that stability masks a turbulent stretch that has left investors and analysts sharply divided.
The sell-off comes from an elevated base. Despite the recent slide, Nokia shares are still up 41.86 percent since the start of the year. The stock now trades nearly 47 percent below its 52-week high of €14.97, reached on June 3, and sits almost exactly on its 200-day moving average — a level that could act as either support or resistance in the sessions ahead. The 14-day relative strength index has fallen to 33.3, signaling oversold conditions, while the annualized 30-day volatility has spiked to 68.44 percent, underscoring just how turbulent trading has been since the second-quarter report.
The Math Behind the Guidance
The core issue weighing on the stock is the arithmetic embedded in Nokia's full-year forecast. Management has held firm on its 2026 target for comparable operating profit of between €2.1 billion and €2.6 billion. Through the first half, the company delivered just €735 million of that. To hit the midpoint of €2.35 billion, Nokia needs €1.62 billion in the second half — with the third quarter expected to contribute roughly €434 million, the fourth quarter alone would have to deliver around €1.18 billion. That's more than the entire first half combined.
Such a back-loaded trajectory leaves little margin for error in the final three months of the year. The company is also grappling with restructuring outflows of €700 million to €800 million in 2026, and its cash conversion forecast remains wide at 55 to 75 percent. Supply constraints and rising memory chip costs continue to pressure margins, a theme echoed across the industry. Ericsson's chief financial officer, Lars Sandström, has warned that AI-driven demand is pushing up memory chip prices, creating a headwind for the entire sector.
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Analysts Split on the Path Forward
The investment banking community has responded to Nokia's results with unusually divergent views. Deutsche Bank cut its price target from €13.50 to €11.50 on July 27 but maintained a "Buy" rating. Bank of America moved in the opposite direction, raising its target from $18 to $18.50, also with a "Buy" recommendation. Goldman Sachs holds at "Neutral," Craig-Hallum has reaffirmed its buy stance, and Barclays continues to recommend selling the stock.
The disagreement reflects a fundamental question: does the AI-driven growth story outweigh near-term margin and cash flow concerns? FactSet consensus puts 2026 earnings per share at $0.39, implying a price-to-earnings ratio of roughly 23. The average analyst price target stands at $12.81 — suggesting theoretical upside of about 40 percent — but the estimates themselves range widely, from $6.30 to $20.47.
Nokia's own guidance points to third-quarter revenue growth of 3 to 7 percent sequentially, with operating profit expected to remain flat. The real earnings boost is slated for the fourth quarter, when software revenue is expected to normalize.
A Dividend Arrives Amid the Turmoil
Adding to the mix this week is a scheduled dividend payment. The board approved a distribution of €0.04 per share on July 23, 2026, with the record date set for July 28 and payment due August 6. That payout is part of a broader authorization: shareholders approved up to €0.14 per share for fiscal 2025 at the annual meeting on April 9, 2026, to be distributed in up to four installments throughout the year.
The AI Engine Keeps Running
Beneath the share price turbulence, the AI business continues to fire on all cylinders. The AI and cloud segment grew 105 percent year over year in the second quarter — the secondary report cites 103 percent — and now accounts for 9.3 percent of group revenue. Order intake from AI and cloud customers reached €2.8 billion in the quarter alone.
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CEO Justin Hotard has cautioned that memory chip shortages are likely to persist, making them a key swing factor for margins into next year. The company is also pressing ahead with long-term capacity plans in the United States, having agreed to acquire an NXP Semiconductors wafer facility in Chandler, Arizona, pending regulatory approval. Nokia plans to lease manufacturing capacity there starting in early 2027 before converting the site for optical components used in AI data centers. The deal is expected to close in the first quarter of 2029 — a strategic investment rather than a near-term earnings lever.
A Sector-Lagging Week
The recent weakness has also left Nokia trailing its peers. Over the past week, Ericsson gained 2.5 percent and the OMX Helsinki 25 index rose 0.3 percent, while Nokia fell 3.2 percent. The relative underperformance underscores how much of the recent selling is company-specific, tied to the demanding guidance path and margin concerns.
With the next earnings report not due until October, the near-term catalysts are limited to analyst repositioning, the technical battle around the 200-day average, and the dividend payout later this week. The broader question — whether Nokia can convert its AI order momentum into the concentrated profit delivery it has promised for the fourth quarter — will ultimately be answered by the numbers, not the chatter.
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