Nokia's U.S.-listed shares rebounded 3.81% on Friday, recovering from a sharp 6.37% decline the previous day. The Helsinki-listed shares mirrored the move, climbing 3.79% to €10.945. This bounce comes after a two-day sell-off that had erased some of the gains from the company's recent AI-driven rally.
AI and Cloud Sales Surge
The recovery follows Nokia's first-quarter earnings beat, which saw comparable operating profit jump 54% to €281 million, surpassing analyst expectations of €250 million. Comparable net sales reached €4.5 billion. The standout driver was a 49% surge in sales to AI and cloud clients, with orders from this segment hitting €1 billion. CEO Justin Hotard described the quarter as a "solid start," noting that demand "accelerated significantly" after the company unveiled its AI strategy late last year. AI and cloud customers now account for 8% of total group sales.
Market Context and Challenges
Despite the positive momentum, Nokia's American depositary receipts closed at $12.82, still below the May 5 high of $13.98. The company maintained its full-year comparable operating profit guidance of €2.0 billion to €2.5 billion. It also raised its 2026 sales growth forecast for the Network Infrastructure unit to 12%-14%, up from 6%-8%, citing strength in optical and IP networks. However, concerns persist. AI and cloud remain a small portion of overall sales, and Fixed Networks revenue dropped 13% in Q1. Hotard also flagged longer supply chain lead times, which could dampen near-term growth.
Competitive Landscape
Nokia is increasingly viewed as a key European AI infrastructure play, moving beyond its legacy telecom equipment roots. The company is pushing to supply more optical and IP networking hardware to hyperscalers—large cloud providers expanding AI data centers. Its recent $2.3 billion acquisition of Infinera positions it as the second-largest player in optical networking globally, with about 20% market share, trailing only Huawei. Competitors include Ciena, Arista, and Cisco. Hotard has warned that Europe lacks sufficient AI data center infrastructure, risking business migration to the U.S. and China if new capacity isn't built.
Outlook and Investor Focus
Nokia is scheduled to report second-quarter and half-year results on July 23. Investors are watching to see if Friday's rally signals genuine traction in AI infrastructure or is merely a short-term bounce. The stock's valuation remains under scrutiny, as any slowdown in cloud orders or headwinds in mobile networks could trigger renewed selling pressure.
