Nokia shares rose 8.4% to about $9.15 after investors reassessed the telecom equipment maker’s latest results and focused on a standout figure: €2.8 billion in AI and cloud order intake for the quarter.
The move followed a steep post-earnings selloff, even though Nokia reported €4.82 billion in second-quarter net sales, up 9% on a constant-currency basis, and doubled AI and cloud revenue year over year. The stock’s rebound highlights the market’s struggle to weigh strong demand against weak reported cash flow.
For investors, the central question is whether Nokia’s AI infrastructure momentum can outweigh negative free cash flow of €732 million and a large restructuring bill that dragged reported profitability to break-even levels.
Key Facts
- Nokia shares traded near $9.15 after rising 8.4%, following a 7.1% drop after the July 23 earnings release.
- Second-quarter net sales reached €4.82 billion, up 9% year over year on a constant-currency basis.
- AI and cloud revenue climbed 105% to €446 million, while AI-related order intake totaled €2.8 billion.
- Comparable operating profit was €434 million with a 9.0% margin, but free cash flow was negative €732 million.
- Nokia maintained full-year comparable operating profit guidance of €2.1 billion to €2.6 billion and expects to land above the midpoint.
Nokia AI Order Intake
The most important takeaway from Nokia’s quarter is that demand tied to AI networking infrastructure remains strong. The company’s €2.8 billion AI and cloud order intake far exceeded the €446 million of revenue recognized from that business in the period, suggesting a substantial backlog that can support future growth if deliveries stay on schedule.
That matters because Nokia is no longer being judged only as a mature telecom vendor tied to the slower mobile infrastructure cycle. Growth is increasingly coming from optical networks, IP networks, and data center interconnect products used by hyperscalers and cloud operators. Those categories have become more valuable as AI workloads drive heavier traffic between data centers and raise demand for high-capacity networking equipment.
At the same time, the quarter showed why the stock remains contentious. Comparable figures looked healthy, with gross margin improving to 46% and adjusted earnings beating expectations. But reported results told a different story after restructuring charges and related costs pushed GAAP earnings per share to essentially zero and drove a large cash outflow. Investors are effectively being asked to value Nokia on future mix improvement while absorbing near-term financial noise.
Nokia’s quarter showed that AI demand is real, but the market wants proof that strong orders can turn into cleaner profits and cash flow.
Why the market reacted so sharply
The share-price volatility reflects two competing narratives. On one side, Nokia is benefiting from a major shift in spending toward AI infrastructure, with Network Infrastructure emerging as the company’s growth engine. On the other, its legacy mobile business remains under pressure in a market that has moved past the peak of the 5G investment cycle.
The restructuring program sits at the center of that transition. Nokia is targeting €1.2 billion in gross cost savings by the end of 2026. Strategically, that supports the pivot toward higher-growth segments. Financially, however, it creates a period in which reported earnings, cash flow, and segment comparisons are harder to interpret, making the stock more vulnerable to swings in sentiment.
Implications for Investors
For investors, Nokia offers a mix of opportunity and execution risk. The opportunity lies in its expanding position in AI-related networking, particularly after the integration of Infinera strengthened its optical portfolio. If the company can convert its order book into revenue at attractive margins, the current valuation could look more reasonable on forward earnings than on trailing results.
The key watch-points are cash flow, supply constraints, and fourth-quarter delivery. Management indicated that some software revenue recognition benefited the second quarter, which raises the bar for upcoming quarters. Supply-chain issues, especially around memory components, also remain a risk across telecom and AI infrastructure markets. A strong backlog helps, but only if Nokia can ship product on time and protect gross margin.
Investors should also weigh the split inside the business. Network Infrastructure is growing on AI and cloud demand, while Mobile Infrastructure faces a more mature spending environment. That means Nokia’s investment case is increasingly tied to whether its faster-growing businesses become a larger share of total revenue over the next several quarters.
Nokia’s rebound suggests investors are willing to reward evidence of AI demand, but the next phase will depend less on orders alone and more on execution. The company’s upcoming quarters, especially margin performance and backlog conversion, will be critical in determining whether the stock can sustain a recovery toward prior levels.