Nokia Stock Is Still Up 52% This Year, but Is the AI Rally Already Over?
Nokia shares surged on AI infrastructure excitement, then quietly started giving back those gains. With a critical earnings report on the calendar and one specific revenue line holding the whole thesis together, the next few weeks could answer whether this…
Nokia (NYSE:NOK | NOK Price Prediction) shares have gained 88.6% over the past year to $9.90. Recent sessions show a decline, though. The stock slipped 4.0% over the past week and another 2.7% in Tuesday premarket trading. The decline has continued alongside AI-focused headlines. The market may be pricing the AI enthusiasm back out.
On September 8, we asked whether Nokia’s surge was built on substance, when shares closed at $10.03. We concluded that the operating recovery was genuine and that the lower price was easier to defend than the peak. Since then, the stock has drifted slightly lower.
What Nokia Actually Sells Now
Nokia makes much of the plumbing behind the internet. It sells optical gear that sends data as pulses of light over fiber cables between data centers, routers that direct that traffic, radio equipment for cell towers, and patent licenses. AI data centers need huge amounts of this connecting equipment, and the suppliers behind that expansion (power, cooling, networking) are the ones we profiled in a free report on seven AI infrastructure names that aren’t chipmakers. That demand drives Nokia’s growth outlook.
Valuation: Cheaper Than the Peak, Still Priced for Growth
Nokia trades at 74 times trailing earnings and 24 times forward earnings. Restructuring boosts the trailing figure. Second-quarter net income was only €5 million ($5.7 million), after €390 million ($445.05 million) in accelerated restructuring charges. The forward multiple shows that the market already expects earnings to rise.
Shares are 43.3% below the 52-week high of $17.45 and just below the 50-day and 200-day moving averages of $10.22 and $10.12. The consensus target of $14.97 implies 51.2% upside. Analysts are tilted bullish. Today’s price leaves room for results to catch up with the AI-driven upside that was priced in at the spring peak.
Catalyst: An October Report That Tests the Thesis
Nokia’s third-quarter report is scheduled for October 22 before the market open. Management has guided to 3% to 7% sequential sales growth with comparable operating profit roughly flat, so three metrics carry the most weight:
- AI & Cloud customer net sales, which more than doubled to €446 million ($508.9 million) in Q2.
- Order intake, which reached €2.8 billion in Q2 and, according to management, was helped by “several significant long-term orders.”
- Optical Networks, which grew 20% in constant currency in Q2.
On the July call, CEO Justin Hotard said, “supply continues to be the main industry constraint, prompting our customers to place longer-term orders.”
Downside: What a Miss Would Cost
Nokia is a Finnish company that reports in euros. Its U.S.-listed shares therefore move with currency swings and with broad selling in foreign stocks, independent of company fundamentals. In Q2 2025, an FX hit of roughly €230 million and a tariff drag of €50 million to €80 million produced EPS of €0.04 ($0.04), missing the $0.06 estimate. That quarter marked the low point before the run.
Management describes its AI customer base as “fairly concentrated today,” and spending on networking equipment comes in uneven waves. Free cash flow was −€732 million (−$835.33 million) in Q2. So much of the gain rests on AI & Cloud that a quarter of shrinking orders could send shares back toward the $6.05 level where the rally began last October.
Verdict: AI & Cloud Sales Hold the Key
The monthly slide has lowered the valuation, and the business is still improving. Nokia has beaten estimates for three straight quarters, AI & Cloud sales doubled, and management expects full-year operating profit to land “somewhat above the midpoint” of guidance. AI & Cloud net sales are the key metric. If AI & Cloud net sales on October 22 come in below Q2’s €446 million ($508.9 million), the AI premium is fading and this verdict no longer holds.
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Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.
Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community.
Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.
Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, moderating workshop sessions at regional conventions.
