HELSINKI, July 20, 2026, 15:08 EEST — Nokia Oyj (HEL:NOKIA) shares advanced on Monday ahead of its second-quarter earnings report, despite the telecommunications equipment maker grappling with a significant profit shortfall in the second half of the year. The stock rose 3.03% to €9.12, outperforming the OMX Helsinki 25 index, which gained 0.49% in afternoon trading.
The latest consensus estimates for the second quarter project sales of €4.822 billion and comparable operating profit of €376 million, implying an operating margin of 7.8%. While these figures would represent a modest improvement from the first quarter, when sales were €4.497 billion and operating profit was €281 million (margin 6.2%), the real challenge lies ahead.
Preliminary calculations indicate that the second half of the year accounts for 72% of the consensus full-year profit estimate. Nokia needs to generate €1.70 billion in comparable operating profit in the second half to align with analyst expectations for the full year, which would require a dramatic jump in profitability. The projected operating margin for the second half is 14.8%, up from approximately 7.0% in the first half, while sales are expected to rise by 24% and profit by 159%.
Meeting second-quarter expectations alone would not resolve the profit challenge. A significant margin improvement would still be required after June. Analysts' forecasts for Q2 comparable operating profit range from €303 million to €457 million, with the consensus representing about 16% of the annual estimate, at the high end of Nokia's typical seasonal range of 12%–16%.
During the first quarter, investor visibility into demand improved, driven by a 49% increase in revenue from AI and cloud customers, resulting in €1 billion worth of orders. Optical Networks sales also rose 20%. Chief Executive Justin Hotard stated, "We are raising our growth outlook for Optical and IP Networks and allocating investments to meet the rising demand from AI & Cloud customers."
Nokia maintained its full-year comparable operating profit guidance of €2.0 billion to €2.5 billion. Analysts on average expect €107 million more than the midpoint of Nokia's guidance. However, peer performance offers less reassurance. Telefonaktiebolaget LM Ericsson (STO:ERIC-B) reported a 6% decline in second-quarter revenue, with network sales falling 8%, though adjusted operating income was marginally better than anticipated. Ericsson CFO Lars Sandström told Reuters, "The whole AI build-out is putting quite the pressure on the whole industry, including us," and warned of rising expenses for memory chips.
Key risks that could widen Nokia's profit gap in the second half include higher component costs, currency fluctuations, tariffs, weaker customer demand, or project delays. Nokia plans to publish its results on July 23 at approximately 08:00 EEST. Markets will closely watch developments in AI and cloud bookings, gross margin performance, and the company's guidance for the full year. A quarter that meets expectations would leave the yearly goal within reach, though the bulk of the work would remain for the second half.