Nokia Oyj (HEL:NOKIA) experienced a continued decline in its stock price on Wednesday, with shares falling 0.95% to €7.75 during Helsinki trading. This drop extends a broader downward trend that has seen the stock lose approximately 15.4% since July 22. The company's U.S. depositary shares also fell 3.3% on Tuesday, while the Nasdaq Composite eased 0.2%.
The trading pattern suggests market concerns about conversion rates rather than weak demand. Nokia has secured AI and cloud orders at a pace that significantly outpaces its reported sales. According to company filings, new order intake for AI and cloud in the second quarter reached €2.8 billion, compared to sales of €446 million—a ratio of 6.3 times. This is a sharp increase from the first quarter, where orders of €1.0 billion were 2.8 times sales of approximately €360 million.
CEO Justin Hotard emphasized that “demand remains strong, while supply continues to be the main industry constraint.” He noted that about half of the €2.8 billion in Q2 orders is expected to convert to revenue over the next 12 months. However, the timing of this conversion is critical, as extended lead times increase transparency but delay both revenue and cash flow.
Nokia’s updated profit forecast for 2026 now stands at €2.1 billion to €2.6 billion, an increase of €100 million. However, the company clarified that this adjustment is due to two business units being reclassified as discontinued operations, not from improved operational performance. Management projects Q3 sales to grow 3% to 7% sequentially, with comparable operating profit expected to remain flat, followed by growth in Q4.
In the second quarter, comparable operating profit rose 18% to €434 million, beating the analyst consensus of €382 million. Revenue increased 8% to €4.82 billion. However, Nokia posted a €50 million operating loss as it accelerated restructuring efforts, with projected restructuring cash outflows between €700 million and €800 million for the year.
Segment performance showed mixed results. Operating margin at Network Infrastructure improved to 8.1% from 6.4%, while Mobile Infrastructure’s margin declined to 11.6% from 12.2%. Peer Ericsson (NASDAQ:ERIC) faces similar cost pressures, with its stock dropping nearly 12% after a warning about increased memory-chip expenses.
Risks remain for Nokia, including potential delays in order conversion if semiconductor supplies stay tight, component prices rise, or customers slow production. The company’s reliance on a stronger Q4 profit contribution reduces flexibility for any timing delays. The focus now shifts to converting the record order backlog into revenue.