Nokia Oyj (HEL:NOKIA) shares climbed 5.3% on Tuesday, closing at €9.386 in Helsinki trading, as investors focused on the company's ambitious second-half margin targets. The OMXH25 index advanced 0.37% on the day, while European technology shares rose 2.1%. The rebound partially offset last week's steep 18.8% decline, though the stock remains 13.9% below its July 10 closing price.
Second-Half Margin Expectations
Initial consensus estimates suggest Nokia needs to deliver a comparable operating margin of 14.8% in the second half of 2026, more than double the 7.0% recorded in the first half. This implies that nearly 72% of the projected full-year comparable operating profit of €2.357 billion must be generated in the latter six months. Achieving this target would require €11.51 billion in sales during the second half, compared with first-half revenue of €9.319 billion.
Q2 Earnings Preview
Nokia is scheduled to report second-quarter results at approximately 08:00 EEST on Thursday. According to Infront's initial consensus, Q2 revenue is expected to come in at €4.822 billion, representing a 7.2% sequential increase from the first quarter and aligning closely with Nokia's own guidance of 5%-9% growth. Profit forecasts are positioned at the upper end of the seasonal band, with a €376 million projection representing 16.0% of the annual consensus, within Nokia's guidance range of 12% to 16%.
The preliminary full-year consensus stands at €2.357 billion in comparable operating profit, while Nokia's forecast ranges from €2.0 billion to €2.5 billion. The timing of profit delivery remains uncertain, but the company's internal seasonal outlooks anticipate stronger performance later in the year.
Segment Performance and AI Impact
Network Infrastructure is projected to deliver the highest sequential sales growth in Q2, with an estimated increase of 11.8%, while Mobile Infrastructure is expected to rise 3.7%. Nokia's AI and cloud business saw sales climb 49% during the first quarter, contributing to group revenue growth of 4% on both a constant-currency and portfolio basis. The company has secured €1 billion in AI and cloud orders, and CEO Justin Hotard stated in April that "Demand has accelerated significantly."
However, competitive pressures are emerging. Ericsson (STO:ERIC-B) recently cautioned that heightened AI demand is driving up memory-chip prices, which could impact costs. CFO Lars Sandström noted, "The whole AI build-out is putting quite the pressure on the whole industry, including us."
Key Risks and Outlook
Risks remain centered around component cost inflation, exchange rate fluctuations, project scheduling, and carrier expenditure. A less favorable product mix could delay the necessary margin increase. Thursday's report will test the €376 million profit projection and a 7.8% margin, with Network Infrastructure revenue expected to reach €2.044 billion. The outlook for margins and component costs may carry greater significance than the headline numbers. Falling short would increase the already substantial challenge for the second half.