Nokia Oyj (NYSE:NOK; HEL:NOKIA) saw its New York-listed American depositary receipts climb 2.39% to $10.935 by 14:08 EDT on Monday, as the Finnish telecom equipment maker officially rejoined the EURO STOXX 50 index. The Helsinki-listed shares also advanced, gaining 2.54% to €9.60 before the close.
The index inclusion, announced by STOXX on September 1, took effect at the European market open. STOXX added Nokia and Engie while removing Volkswagen's preferred shares and Wolters Kluwer. While the move creates mechanical demand from passive funds that track the benchmark, it does not, by itself, improve Nokia's underlying fundamentals. Indeed, trading volume in New York reached only 73% of the three-month daily average by early afternoon, suggesting that the rally may be driven more by index rebalancing than by fresh conviction buying.
Analyst Optimism and Price Targets
Wall Street has taken notice of Nokia's renewed index membership. Two analysts recently set price targets of $15 on the stock, implying roughly 37% upside from the current level. B. Riley Securities' Dave Kang reiterated a Buy rating on September 17, while Rosenblatt Securities' Michael Genovese followed suit on September 14. J.P. Morgan's Sandeep Deshpande is even more bullish, with a $21 target suggesting 92% upside.
These targets reflect growing confidence in Nokia's AI and cloud computing strategy, but they also assume that index-driven demand will translate into sustainable operating growth.
Q2 Results: Growth Amid Restructuring
The company's second-quarter results, released on July 23, paint a mixed picture. Net sales rose 8% year-over-year to €4.815 billion, and comparable operating profit jumped 18% to €434 million, with the comparable operating margin expanding 70 basis points to 9.0%. Notably, AI and Cloud customer sales more than doubled from the prior year, underscoring the momentum in Nokia's most promising business segment.
However, the reported operating margin swung to negative 1.0%, a 430-basis-point deterioration, as Nokia accelerated its restructuring efforts. The company expects €800 million in restructuring charges this year, a significant headwind that tempers the AI narrative.
Microsoft Partnership and Near-Term Catalysts
A recent update from Microsoft Corporation (NASDAQ:MSFT) on September 17 added a tangible product test. Nokia announced that its shared automation solution is now generally available, though it did not disclose specific customers, contract values, or revenue expectations. This partnership could be a key driver if it converts into paid deployments.
Looking ahead, Nokia guides for third-quarter net sales growth of 3% to 7% sequentially, with comparable operating profit expected to remain broadly flat before a stronger fourth quarter. These forecasts will be put to the test when the company reports its next earnings.
Risks and the Road Ahead
The immediate risk is that passive buying fades once the index rebalance is complete. Additionally, restructuring charges and potential supply chain constraints could delay the conversion of AI orders into profit. The market now needs to see concrete customer wins and revenue from the Microsoft-linked product to validate the current valuation.
As Nokia settles into its new index status, investors will be watching closely whether the company can turn its AI ambitions into tangible financial results. The next earnings report will be a critical milestone.
