Nokia shares rise 3% as AI demand drives Q2 profit surge
Nokia Corporation reported Q2 2026 net sales of EUR 4.815 billion, an 8% increase YoY, fueled by AI and Cloud demand. Comparable operating profit rose 18% to EUR 434 million. The stock gained over 3% as investors reacted to the strong AI momentum and revised full-year outlook of EUR 2.1-2.6 billion.
*this image is generated using AI for illustrative purposes only.
Nokia Corporation shares rose more than 3% to $9.39 on Monday, driven by investor confidence in its artificial intelligence strategy following a stronger-than-expected second-quarter report. The stock’s gain occurred amid a broader technology rally, with the Nasdaq Composite advancing 1.00% and the S&P 500 rising 0.77%. Investors are responding positively to Nokia’s ability to capitalize on the AI supercycle, which fueled an 8% year-on-year increase in net sales to EUR 4.815 billion for the quarter ended June 30, 2026.
The financial results underscored a significant shift in revenue composition, with net sales to AI & Cloud customers surging 105% year-on-year. This segment now accounts for 9.3% of total sales, reflecting robust demand for AI data center networking products. President and CEO Justin Hotard highlighted that order intake in the AI & Cloud space reached EUR 2.8 billion during the quarter. However, Hotard also warned that memory supply constraints are likely to persist through 2027 as AI infrastructure demand continues to outpace supply.
Financial Performance
Nokia’s comparable operating profit rose 18% year-on-year to EUR 434 million, while comparable diluted EPS reached EUR 0.07, up from EUR 0.04 in the prior-year period. On a reported basis, operating profit was EUR (50) million, impacted by a faster pace of restructuring charges totaling EUR 800 million for the year. Network Infrastructure net sales grew 12% year-on-year on a constant currency basis, led by Optical Networks (up 20%) and IP Networks (up 16%).
Key Financial Metrics
| Metric (EUR million) | Q2'26 | Q2'25 | YoY Change |
|---|---|---|---|
| Net sales | 4 815 | 4 443 | 8% |
| Comparable operating profit | 434 | 367 | 18% |
| Reported operating profit | (50) | 147 | - |
| Comparable diluted EPS | 0.07 | 0.04 | 75% |
Strategic Outlook and Restructuring
Nokia confirmed its full-year outlook for comparable operating profit is now EUR 2.1 to 2.6 billion, a revision driven by the reclassification of two businesses—Fixed Wireless Access CPE and Enterprise Campus Edge—as discontinued operations. The company expects Network Infrastructure net sales growth of 12–14% for the full year and assumes a 3% to 7% sequential increase in net sales in Q3.
To support its U.S. optical manufacturing capacity, Nokia entered into a definitive agreement to acquire NXP’s Chandler Semiconductor Fabrication campus in Arizona. Concurrently, the company accelerated restructuring actions, primarily in Europe and China. The Board of Directors declared a dividend of EUR 0.04 per share, with a record date of July 28, 2026, and payment on August 6, 2026.
Market Sentiment and Technical Analysis
Wall Street maintains a Buy consensus rating for Nokia with an average price forecast of $14.67. Recent analyst actions include JPMorgan raising its price forecast to $21 on June 12 and Argus Research upgrading the stock to Buy with a $15 target on April 27.
Technically, the long-term trend remains constructive as the stock trades above its 200-day simple moving average (SMA) of $9.09. However, short-term indicators suggest weakness; the stock trades 18% below its 20-day SMA of $11.36 and nearly 30% below its 50-day SMA of $13.30. Key resistance sits at $9.76, near the 200-day exponential moving average (EMA), while support aligns with the 200-day SMA at $9.09.
What the Numbers Show
The divergence between reported operating profit (a loss of EUR 50 million) and comparable operating profit (a gain of EUR 434 million) highlights the aggressive cost-cutting measures currently underway. While restructuring charges of EUR 800 million weigh on reported figures, the underlying operational health remains strong, evidenced by the 70-basis point expansion in comparable gross margin to 46.0%. The surge in AI & Cloud sales suggests that Nokia is successfully transitioning from traditional telecom infrastructure to higher-margin AI networking solutions, although supply chain constraints may limit near-term volume growth.
How might the persistent memory supply constraints through 2027 impact Nokia's ability to fulfill its EUR 2.8 billion AI & Cloud order intake backlog?
What are the potential integration risks and timeline for Nokia's acquisition of NXP’s Chandler Semiconductor Fabrication campus in Arizona?
Could the aggressive EUR 800 million in restructuring charges signal deeper operational challenges that might hinder long-term innovation capabilities?
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