Nokia Oyj shares declined in Helsinki on Thursday, retreating from recent highs as market participants reassessed the sustainability of the company's AI-driven rally. The stock traded near €13.205, down from its previous close of €13.470, according to market data. The broader OMX Helsinki 25 index also slipped 0.73% to 6,519.87, reflecting a cautious tone across Finnish equities.
The pullback comes after a spectacular run that had propelled Nokia's shares more than 140% year-to-date through Tuesday, making it one of the best-performing stocks in the Stoxx Europe 600. The rally was fueled by growing investor enthusiasm for Nokia's potential as an AI infrastructure play, a narrative that has shifted perceptions away from its legacy as a traditional telecom equipment provider.
Nokia's U.S.-listed American Depositary Receipts (ADRs) fell 4.74% to $15.68 on Wednesday, erasing three days of gains. The ADRs had jumped 6.40% on Tuesday, reaching a new 52-week high before the reversal.
Strong AI Demand, but Is It Priced In?
The company's recent quarterly results underlined the strength of its AI-related business. In the first quarter, net sales to AI and cloud customers surged 49% year-over-year, and Nokia secured €1 billion in new orders from AI and cloud clients. Chief Executive Justin Hotard noted that the company is "increasing our growth assumption" for Optical and IP Networks as it invests to meet surging demand.
Nokia raised its 2026 growth forecast for Network Infrastructure net sales to 12%-14%, with Optical Networks and IP Networks combined expected to grow 18%-20%. However, the company maintained its full-year comparable operating profit target of €2.0 billion to €2.5 billion.
Analysts Divided on Next Leg
Despite the positive fundamentals, some analysts caution that the easy gains may be behind. Amanda Lyons, head of research at Energy Group Capital, told The Edge that "the easy rerating is gone," and the key question now is whether there is a second leg to the trade. BNP Paribas analyst Jakob Bluestone acknowledged that Nokia is attracting interest from cloud providers, sparking comparisons to Arista Networks and Ciena, but warned that "the old Nokia has not disappeared either."
Nokia's business mix remains a point of contention. While its optical and IP networking units are seen as pure plays on AI data-center buildout, its mobile networks division—still accounting for over half of sales—continues to weigh on overall performance. Competitors like Ciena offer a purer exposure to optical networking, while Arista is viewed primarily as a data-center switching specialist.
Valuation and Risks
Morgan Stanley analysts have suggested that focusing on next year's earnings targets might overlook the longer-term AI demand story. UBS, meanwhile, favors a sum-of-the-parts approach, arguing that Nokia's AI-linked units could be valued more highly than its slower-growing businesses. According to Bloomberg data, less than half of analysts tracked have a buy rating on the stock.
Risks remain, including a potential slowdown in AI order cycles, supply-chain disruptions, tariffs, and currency fluctuations. With the stock trading at elevated levels, any negative surprise could lead to a sharp correction. Nokia itself has flagged competition, changes in customer investment patterns, and component sourcing as key uncertainties.
As the AI narrative continues to evolve, investors are closely watching whether Nokia can sustain its momentum and deliver on its growth promises without the drag from its legacy operations.
