Nokia Stock Rebounds as S&P Upgrades Outlook on Cloud Demand but Memory Shortages and Telecom Weakness Remain
Nokia stock is attempting to recover after losing more than half its value from a record high, with an S&P Global outlook upgrade and strong AI and cloud orders providing fresh support, although supply constraints, weak traditional telecom markets, and execution risks remain significant concerns.
Nokia stock is attempting to recover after losing more than half its value from a record high, with an S&P Global outlook upgrade and strong AI and cloud orders providing fresh support, although supply constraints, weak traditional telecom markets, and execution risks remain significant concerns.
Nokia Stock Rebounds as Demand Revives Investor Confidence
Nokia stock has endured a severe two-month decline after reaching a record high near €15, falling as much as 50% to approximately €7.40 early Thursday. The selloff continued even after the company delivered stronger-than-expected earnings, highlighting investor concerns that its growing exposure to AI and cloud infrastructure may take time to translate into sustainable financial growth.
The mood has improved, however, with Nokia shares gaining around 5% and approaching €8. The latest rebound followed an important credit-rating development, with S&P Global Ratings upgrading Nokia’s outlook from stable to positive while maintaining its BBB- long-term issuer credit rating and A-3 short-term rating.
The upgrade provides some support for the stock, but it does not eliminate the challenges surrounding Nokia’s transformation.
S&P Global Sees Potential From AI and Cloud Demand
S&P Global said Nokia’s positive outlook reflects the possibility of a one-notch credit-rating upgrade within the next 24 months if the company successfully manages its cost base and benefits from growing network infrastructure demand from AI and cloud customers.
Nokia’s order pipeline provides a major reason for that optimism.
Orders from AI and cloud customers reached €2.8 billion, equivalent to roughly 6.3 times the quarterly revenue generated from those customers.
Nokia expects approximately 50% of these orders to convert into revenue over the next 12 months. That would represent around €1.4 billion, potentially equivalent to approximately 29% of second-quarter group revenue.
However, the difference between orders and recognized revenue remains important. Nokia has demonstrated strong demand, but it still needs to prove that these orders can be converted into revenue and ultimately into profitable growth.
Strong Earnings Highlight Infrastructure Opportunity
Nokia reported an 18% increase in comparable operating profit to €434 million during the second quarter, beating the average analyst estimate of €382 million.
Comparable net sales reached €4.82 billion, also exceeding expectations.
AI and cloud customers were among the strongest contributors to growth. Sales to these customers doubled during the quarter to €446 million, while the €2.8 billion order intake strengthened expectations for future demand.
Nokia’s Network Infrastructure business is particularly well positioned to benefit from the expansion of data centers. Its optical and IP networking operations are gaining attention as AI workloads require increasingly large amounts of data to move rapidly between servers and computing systems.
That creates an attractive long-term opportunity, but the size of the order pipeline also raises expectations for execution.
Memory Shortages Could Limit Growth
One of the biggest risks to Nokia’s growth strategy is the ongoing shortage of memory components.
CEO Justin Hotard warned that supply constraints remain a significant problem for the telecommunications equipment industry. The rapid expansion of AI infrastructure has increased demand for memory components, contributing to tighter supplies and higher prices.
Hotard indicated that demand remains strong, but supply is increasingly becoming the limiting factor, with customers placing longer-term orders to secure components.
If shortages continue into 2027, Nokia could face higher input costs and potential limitations on its ability to deliver equipment on schedule.
This creates an important risk to the company’s AI growth narrative. Strong orders are encouraging, but Nokia must have sufficient components and manufacturing capacity to convert those orders into revenue.
Technical Outlook: Nokia Stock Tests Key Support
From a technical perspective, Nokia shares remain vulnerable after failing to maintain their recent recovery.
The stock’s decline has brought the 200-day simple moving average in purple into focus, with the indicator currently around the €7.50 level.
A decisive break below this area could increase selling pressure and open the possibility of further declines. But we saw a strong rebound on Thursday, sending Nokia to €8.
Nokia Chart Weekly – The 200 SMA Holds in First Attempt
Nokia shares have been trading up since August last year, when the price was trading below €3.50, and in early June it 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 with the help of the 20 daily SMA.
Traditional Telecom Markets Remain Weak
Nokia’s biggest challenge may be balancing rapid growth in AI-related infrastructure against weakness in its traditional telecom operations.
The company’s Fixed Networks division recently recorded a 13% revenue decline, reflecting reduced spending by telecommunications operators and delayed infrastructure investments.
This creates an uneven growth profile.
While AI and cloud-related businesses are expanding rapidly, Nokia still needs those newer operations to become large enough to offset declining revenue from more mature telecom segments.
Until that transition becomes more established, investors could remain skeptical about the durability of Nokia’s earnings recovery.
Restructuring Provides Some Support
Nokia’s cost-cutting strategy offers another potential cushion.
Management expects its restructuring program to generate approximately €1.2 billion in gross cost savings by the end of 2026, while additional efficiency initiatives are planned, particularly across Europe.
The company is also divesting non-core assets and attempting to concentrate resources on businesses where it believes it has stronger competitive advantages.
Nokia expects operating profit to remain above the midpoint of its full-year guidance, although third-quarter operating profit is expected to be broadly similar to the second quarter on a sequential basis.
Nokia Stock Outlook Remains Cautious
Nokia’s latest developments provide investors with reasons for renewed optimism. Stronger earnings, rapidly increasing AI and cloud orders, cost reductions, and the S&P Global outlook upgrade all suggest that the company’s strategic transformation is beginning to gain traction.
However, the stock’s massive decline from €15 demonstrates how quickly sentiment can deteriorate when expectations become too high.
The company still needs to overcome weak traditional telecom demand, memory shortages, restructuring requirements, capital spending, and execution risks. Most importantly, Nokia must demonstrate that its large AI and cloud order pipeline can translate into sustained revenue, margins, and cash flow.
For now, the rebound toward €8 improves the short-term technical picture, but the longer-term recovery remains dependent on execution. Nokia’s AI opportunity is significant, but investors may remain cautious until strong orders become consistent earnings growth and the company’s newer businesses can reliably offset weakness across its legacy telecom operations.
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