Nokia Stock Gains Momentum as Cloud Orders Revive Optimism, but €9 Resistance Could Test the Recovery
Nokia shares are attempting to recover after losing roughly half their value, with stronger AI and cloud orders and a positive S&P Global outlook supporting sentiment, although supply shortages, weak telecom demand and execution risks remain concerns.
Quick overview
- Nokia shares are attempting to recover after a significant decline, supported by stronger AI and cloud orders and a positive outlook from S&P Global.
- The company reported strong second-quarter earnings, with a notable increase in sales from AI and cloud customers, but faces challenges from supply shortages and weak demand in traditional telecom markets.
- Nokia's order pipeline for AI and cloud infrastructure is promising, but the company must effectively convert these orders into revenue to ensure sustainable growth.
- Despite recent improvements, Nokia's recovery remains vulnerable to execution risks and ongoing supply chain issues.
Nokia shares are attempting to recover after losing roughly half their value, with stronger AI and cloud orders and a positive S&P Global outlook supporting sentiment, although supply shortages, weak telecom demand and execution risks remain concerns.
Nokia Shares Attempt to Recover
Nokia stock is attempting to recover after suffering a brutal two-month decline that erased more than half of its value from the record high near €15.
The shares fell as low as approximately €7.40 last week before finding technical support and have now rebounded around 6.5%, approaching the €9 area.
The recovery comes despite the stock’s recent weakness following stronger-than-expected earnings. Investors had become increasingly concerned that Nokia’s growing exposure to AI and cloud infrastructure could take longer than expected to translate into sustainable revenue and profits.
The latest rebound has been supported by improving fundamentals and a more constructive credit outlook, although the recovery remains vulnerable to execution problems and weakness across Nokia’s traditional telecom operations.
S&P Global Upgrades Nokia’s Outlook
One of the most important recent developments came from S&P Global Ratings, which upgraded Nokia’s outlook from stable to positive while maintaining its BBB- long-term issuer credit rating and A-3 short-term rating.
S&P said Nokia could potentially receive a one-notch credit-rating upgrade within the next 24 months if the company successfully manages its cost base and benefits from increasing network infrastructure demand linked to AI and cloud computing.
The outlook upgrade provides a degree of support for the shares, but it also places greater emphasis on Nokia’s ability to execute its transformation.
AI and Cloud Orders Provide a Major Opportunity
Nokia’s AI and cloud order pipeline is becoming an increasingly important part of the investment story.
Orders from AI and cloud customers reached approximately €2.8 billion, equivalent to around 6.3 times the quarterly revenue generated from those customers.
Nokia expects approximately 50% of these orders to convert into revenue during the next 12 months. That would represent roughly €1.4 billion and potentially equal about 29% of second-quarter group revenue.
The numbers are encouraging, but investors need to distinguish between orders and recognized revenue.
A large order pipeline demonstrates demand, but Nokia still needs to deliver the equipment on time, manage costs and convert those contracts into profitable revenue.
Strong Earnings Highlight Network Infrastructure Demand
Nokia’s second-quarter results provided further evidence of improving operational performance.
Comparable operating profit increased 18% to €434 million, 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 sources of growth, with sales to these customers doubling to €446 million during the quarter.
Nokia’s Network Infrastructure business is particularly exposed to the expansion of AI data centers. Optical and IP networking equipment is becoming increasingly important as AI workloads require enormous volumes of data to move rapidly between servers and computing systems.
This creates a potentially significant long-term opportunity.
However, rapid growth also raises expectations, leaving Nokia with less room for execution errors.
Supply Constraints Could Become a Problem
One of the biggest threats to Nokia’s growth ambitions is the continuing shortage of memory components.
CEO Justin Hotard has warned that supply constraints remain a significant issue across the telecommunications equipment industry. The rapid expansion of AI infrastructure has increased demand for memory, contributing to tighter availability and higher prices.
Customers are reportedly placing longer-term orders to secure supplies, highlighting the strength of demand but also the growing pressure on the supply chain.
If shortages continue into 2027, Nokia could face higher input costs or delays in fulfilling orders.
That would create a difficult situation: demand may be strong, but the company’s ability to convert demand into revenue could become constrained by component availability.
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 today, sending Nokia close to €. However, buyers are facing the 20 daily MA now, which has been acting as resistance during the decline, so they will have to push the price above that MA for the trend to turn bullish.
Nokia Chart Weekly – The 200 SMA Holds in First Attempt
Traditional Telecom Markets Remain Weak
Nokia’s transformation is not without challenges.
Its traditional telecommunications businesses continue to face weak demand, particularly as operators remain cautious about infrastructure spending.
The Fixed Networks division recently recorded a 13% revenue decline, reflecting reduced spending and delayed investments by telecom customers.
This creates an uneven growth profile for Nokia.
AI and cloud-related orders are increasing rapidly, but the company still needs those newer businesses to become large enough to offset weakness in mature telecom operations.
Until that transition becomes more established, investors may remain cautious about the sustainability of Nokia’s earnings recovery.
Cost Cutting Could Provide Additional Support
Nokia’s restructuring program offers another potential source of improvement.
Management expects the program to generate approximately €1.2 billion in gross cost savings by the end of 2026, with additional efficiency measures planned, particularly across Europe.
The company is also divesting non-core assets and focusing investment on areas 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 remain broadly similar to the second quarter.
Conclusion: Recovery Still Faces a Major Test
Nokia’s rebound toward €9 is supported by several encouraging developments, including the S&P Global outlook upgrade, strong AI and cloud orders, improved quarterly profitability and an expanding data-center infrastructure opportunity.
However, the recovery is far from secure.
Supply shortages could restrict growth, traditional telecom markets remain weak, and Nokia must prove that its substantial order pipeline can translate into profitable revenue.
Technically, €9 has become an important resistance area. A sustained break above that level could strengthen the recovery signal after the severe selloff, while failure to clear it could leave the shares vulnerable to renewed profit-taking.
For now, Nokia’s transformation is showing promising signs, but investors may remain cautious until strong AI and cloud demand translates into consistent revenue growth, stronger margins and sustainable cash generation.
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