Nokia Stock Rebounds from Early Losses but Resistance and AI Spending Concerns Continue to Pressure

Quick overview

Nokia shares came under heavy pressure as investors locked in profits and growing concerns over an AI-driven market bubble, weakening legacy businesses, and lofty valuations overshadowed optimism surrounding the company’s cloud infrastructure and networking expansion.

Historic Rally Comes to an Abrupt Halt

After delivering one of the strongest performances in the telecommunications sector this year, Nokia’s remarkable rally has begun to lose momentum.

The stock opened Monday with a sharp bearish gap, briefly tumbling around 8% to trade near the $12 level as investors rushed to reduce exposure to technology and AI-related names. Although buyers emerged throughout the U.S. trading session, allowing the shares to recover much of the early decline, Nokia still finished the day at $12.87, down 1.6%.

The recovery helped limit losses, but the sharp reversal highlighted a clear shift in investor sentiment. After months of relentless buying, traders appear increasingly willing to secure profits as concerns over valuations and the sustainability of the AI-driven rally continue to build.

AI Spending Gives Way to Bubble Fears

Much of Nokia’s impressive advance over the past year has been fueled by expectations that artificial intelligence will generate a multi-year investment cycle in networking infrastructure.

Demand for optical networking equipment has strengthened as hyperscale cloud providers continue expanding data centers to support AI workloads. Nokia has positioned itself as a key supplier to this trend and recently raised its long-term outlook for AI-related networking demand.

However, investor enthusiasm toward AI stocks has recently become more cautious.

Across Wall Street, concerns are growing that technology companies may be spending aggressively on AI infrastructure without clear evidence that future profits will justify the enormous capital investment. Those concerns have spread beyond software companies and semiconductor manufacturers into infrastructure providers such as Nokia.

As investors reassess whether AI expectations have become too optimistic, stocks that previously benefited most from the AI narrative have become increasingly vulnerable to sharp corrections.

Legacy Business Weakness Returns to the Spotlight

While Nokia’s cloud and networking businesses continue expanding, investors are once again focusing on weaknesses in the company’s traditional operations.

The company’s latest quarterly results exceeded expectations overall, but Fixed Networks revenue declined by 13%, reflecting continued weakness in parts of Nokia’s legacy portfolio.

Management has consistently described the decline as part of its strategic transformation toward higher-growth infrastructure businesses. Nevertheless, investors remain concerned that shrinking legacy operations could offset gains from newer segments if growth in AI-related markets slows.

The latest pullback suggests the market is placing greater emphasis on execution risks rather than simply rewarding long-term growth potential.

Nokia Chart Daily – The 20 SMA Has Turned Into Support

Nokia shares have been trading up since August last year, when the price fell below $3.50, and yesterday  reached $15. Moving averages have been acting as support during pullbacks, helping keep the trend bullish. We saw a dip below $7 in late March, but the sentiment improved, with last week’s earnings helping investors, and Nokia shares extended the upside to $15 last week with the help of the 20 daily SMA. In the last three days we’ve seeing a pullback and the 20 SMA has been broken which might turn into resistance. If buyers want to resume the uptrend, they will have to push above this MA this week.

Expansion Strategy Brings Additional Risks

Nokia continues investing heavily to strengthen its competitive position in next-generation networking technologies.

The integration of Infinera is progressing ahead of schedule, while the company is expanding manufacturing capacity and introducing new networking products designed to capitalize on increasing cloud infrastructure demand. Nokia has also agreed to divest its fixed wireless access equipment business to Inseego as part of a broader strategy to streamline operations and focus on higher-margin segments.

Although these initiatives could improve Nokia’s long-term competitive position, they also introduce execution risks. Large acquisitions, portfolio restructuring, and manufacturing expansion require significant investment and often take years before producing meaningful financial returns.

Any delays or weaker-than-expected demand could place additional pressure on investor confidence.

Valuation and Competition Create New Challenges

Following its remarkable rally, Nokia entered the second half of the year carrying much higher market expectations.

After substantially outperforming many peers, investors are increasingly questioning whether the company’s valuation fully reflects future growth prospects. At the same time, competition across networking equipment and cloud infrastructure continues to intensify, with rivals investing aggressively to capture a larger share of AI-related spending.

The combination of rising competition, elevated expectations, and lingering weakness in legacy operations has made investors less willing to overlook potential risks.

As a result, even positive developments in cloud networking have struggled to offset broader concerns surrounding valuation and future profitability.

Nokia Q1 2026 Earnings Highlights

Operating Profit Beat:

• Comparable operating profit came in at €281 million
• Up 54% year-over-year, beating the €250 million consensus

Revenue Growth:

• Total net sales reached €4.5 billion
• Representing a 4% annual increase
• Reported revenue of $5.27 billion, well above the $4.59 billion forecast

Earnings Per Share:

• EPS came in at $0.06, matching expectations
• Cloud and Tech Segment Driving Growth
• Revenue from technology and cloud customers surged 49%
• Nokia secured €1 billion in new cloud contracts during the quarter
• Book-to-bill ratio exceeded 1.0, signaling strong future demand

This highlights a clear shift toward higher-growth, higher-margin segments, particularly cloud infrastructure and enterprise solutions.

Key Takeaways

• Strong profit growth outpaced revenue, indicating improved margins
• Cloud momentum is becoming a core driver of performance
• Solid order intake and backlog support forward visibility

Outlook

Nokia remains well positioned to benefit from long-term investments in cloud infrastructure, optical networking, and artificial intelligence. However, the recent pullback illustrates that strong growth stories alone may no longer be enough to support elevated share prices.

With Wall Street becoming increasingly cautious about AI-related valuations, investors are paying closer attention to execution, profitability, and the pace at which new growth businesses can replace declining legacy operations. Until Nokia demonstrates that its expanding infrastructure business can consistently offset those structural headwinds, the stock may remain vulnerable to further volatility despite its promising long-term strategy.

ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.