Nokia Oyj (HEL:NOKIA) experienced a significant surge in its stock price last week, with shares climbing 9.64% on Thursday following the announcement of a €100 million joint investment in a private AI company under the NestAI defense partnership. The move added approximately €5.5 billion to Nokia's market capitalization, based on its 5.6 billion outstanding shares, representing a move 55 times larger than typical daily swings. The stock closed Friday at €10.90, though it ended the week 2.46% below its July 3 close.
Defense-AI Partnership Details
The partnership, involving Nokia and Finnish state-owned investment firm Tesi, focuses on developing AI-powered defense solutions for military applications. Nokia unveiled three new tools: a portable 5G network for field command, mission-planning software to identify coverage gaps, and radio technology that connects users and detects threats. These systems are designed for "denied environments" where communications may be jammed or disrupted. Mikko Hautala, Nokia's defense chair, emphasized that "AI only works in the field when it has secure, resilient connectivity behind it."
Market Reaction and Sector Impact
The defense-AI news rippled through the telecom equipment sector. Swedish competitor Ericsson (STO:ERIC-B) saw its shares rise 6.7% on Thursday, while optical networking company Ciena Corp (NYSE:CIEN) gained 4.85%. Both stocks outperformed Nokia for the week, with Ericsson up 3.52% and Ciena adding 9.06% from their respective weekly closes. The broader STOXX Europe 600 Technology index rose 2.7% on Thursday but fell 1.8% for the week.
Shareholder Activity
On Friday, regulatory filings revealed that FMR LLC reduced its Nokia stake by 18.94 million shares, bringing its holding to 279.84 million shares. The sold shares are valued at approximately €206 million based on Friday's closing price. Separately, Nokia distributed 43.55 million treasury shares to incentive plan holders on Thursday, worth about €475 million or 0.76% of total shares. It remains unclear whether recipients have sold these shares.
Financial Performance and Outlook
Nokia has posted strong results in 2026, with first-quarter sales to AI and cloud customers jumping 49% and high-speed optical-network sales rising 20%. The company secured €1 billion in new AI and cloud orders. Comparable operating profit reached €281 million, up 54% year-over-year and above the €250 million analyst consensus. CEO Justin Hotard indicated that Nokia is tracking "somewhat above the mid-point" of its full-year profit forecast of €2.0 billion to €2.5 billion.
Upcoming Catalysts
The market's focus now shifts to Ericsson, which will report its second-quarter results on Tuesday at 07:00 CEST. This will provide an early read on network operator spending and margins, potentially setting expectations for Nokia's own Q2 report on July 23 at 11:30 EEST. The defense update did not include specific customer names or revenue figures, leaving the AI tools unbooked as revenue. Analysts caution that positive catalysts, such as a concrete defense order or strong optical sales, are needed to sustain the rally.
