Nokia's Order Book Is Booming — Its Balance Sheet Is Sending a Different Signal
Published on 10/23/2026 at 06:11 | Editorial boerse-global.de
Nokia's latest quarterly report landed with a thud: the shares shed 14% yesterday. But the sell-off says less about whether the Finnish equipment maker is winning AI business than about what it costs to deliver it. Orders are piling up. Cash is not keeping pace. That gap, more than any verdict on demand, is what investors are now being asked to price.
Demand Is Not the Weak Spot
Revenue from AI and cloud customers jumped 123% year on year in the third quarter of 2026 at constant currency. Orders from that same client group reached EUR 1.5 billion, up 118%. These are not vague aspirations about a future market — they are booked sales and signed contracts.
The growth is anchored in specific network hardware. IP Networks expanded 43% at constant currency, while Optical Networks added 18%. Taken together, Nokia expects those two segments to grow 25–30% in 2027.
Comparable operating profit rose 35% to EUR 605 million, lifting the corresponding margin to 11.7%. Read in isolation, that looks like a quarter that should have been rewarded rather than punished. The market, though, is not grading the three months just ended. It is trying to work out what it will cost to fill the next round of orders.
The Gap Between Headline and Reported Profit
Reported operating profit came in at just EUR 196 million. Restructuring and other charges of EUR 357 million account for much of the distance between that figure and the EUR 605 million adjusted number. Adjusted earnings are a useful lens on the underlying business — but they should not become a parallel universe in which recurring overhaul costs stop counting. A strategically sensible restructuring still consumes real money.
Should investors sell immediately? Or is it worth buying Nokia?
That distinction matters because Nokia has trimmed its forecast for how much of comparable operating profit will convert into free cash flow in 2026, cutting the range to 35–55% from 55–75%. The demand side is not the immediate problem. The question is how much of the profit actually reaches the bank.
Two separate burdens explain the shortfall, and investors should not conflate them. Nokia plans EUR 400 million in additional working capital to keep supply flowing for further growth. On top of that, it now expects restructuring costs of roughly EUR 1.1 billion, up from an earlier EUR 800 million. One ties up money in day-to-day operations; the other weighs on the company's overhaul. Together they explain why a stronger adjusted result does not translate one-for-one into available cash.
A Stagnant Core and Rising Costs
There is a structural warning layered on top. CEO Justin Hotard expects the traditional telecom market to be flat overall, even as cost inflation pushes prices higher. CFO Marco Wirén confirmed broad constraints on supply and input costs, pointing to possible margin pressure next year. The dynamic AI business and a stagnant legacy market now sit side by side inside the same company — a combination that makes a simple growth multiple hard to justify.
Against that backdrop, JPMorgan's view offers a counterweight to the share price slide. Analyst Sandeep Deshpande pointed to consensus-beating results and a surprisingly strong growth outlook for the network business, reaffirming an "Overweight" rating with an 18-euro price target. That addresses Nokia's growth potential; it does not settle the question of financial quality. The two belong together, but they are not the same thing.
Infinera Is the Lever to Watch
The most concrete test sits with Infinera. Hotard says the integration will be wrapped up by the end of 2026 — a full year ahead of schedule — with net synergies of EUR 200 million expected. That is a more meaningful signal than another round of general optimism about AI. A faster integration can demonstrate whether Nokia can convert the cost of its restructuring into a leaner, more capable operation. The promised benefit, however, still has to show up in the numbers.
Management left its 2026 comparable operating profit guidance unchanged at EUR 2.1–2.6 billion, with the result expected above the midpoint. That confirmation is important, though it speaks to a different measure than the liquidity concerns. And not every bit of strength will carry forward: mobile infrastructure benefited in part from sales pulled forward from the final quarter.
For the fourth quarter, Nokia still expects revenue to rise 20–24% from the prior three months. Full quarterly and annual figures are due on 28 January 2027.
Until then, the central question for investors is not whether Nokia gains from the AI build-out — the orders and revenue already answer that. It is how much of that growth survives delivery constraints, tied-up capital and restructuring charges. The next convincing proof point will have to go beyond another demand record: it must show that Nokia can manage the order boom on the financial side, too.
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