Nokia Corporation (NOK) experienced a notable decline in Helsinki trading on Friday, as the recent artificial intelligence-driven rally that propelled the stock to multi-year highs showed signs of exhaustion. The Finnish telecommunications equipment maker's shares slipped 2.74% to €12.96 by late morning, significantly underperforming the broader OMX Helsinki 25 index, which edged down just 0.65%.
The pullback followed two consecutive sessions of weakness in the U.S. markets, where Nokia's American depositary receipts (ADRs) fell over 7% combined on Wednesday and Thursday. The ADRs closed at $15.28 on Thursday, retreating further from the 52-week high set earlier in the week. This reversal comes as investors reassess the sustainability of the recent AI-fueled rally that had recast Nokia from a traditional 5G equipment supplier into a key player in the AI data-center infrastructure space.
The company's transformation narrative gained momentum in April when Nokia reported first-quarter comparable operating profit of €281 million, a 54% year-over-year increase that handily beat analyst expectations of €250 million. Sales to AI and cloud customers surged 49%, and the company booked €1 billion in orders from those customers. CEO Justin Hotard emphasized that Nokia was "increasing our growth assumption" for Optical and IP Networks and investing aggressively to meet surging demand from AI and cloud clients. The company subsequently raised its 2026 Network Infrastructure sales growth forecast to 12%-14%, up from the previous 6%-8% range.
Analyst sentiment remains divided despite the bullish outlook. Morgan Stanley reaffirmed its conviction this week, raising its price target on Nokia to €14 from €11 and designating the stock as its top pick for AI data-center networking exposure. Analyst Terence Tsui noted that "potential new orders can have an outsized effect" given the low revenue base. Conversely, MarketScreener data indicates a consensus target of just €9.375 among 23 analysts, substantially below the prior close of €13.32. SEB Bank upgraded Nokia to "buy" on Thursday, adding to the mixed views.
Competitive dynamics are shifting in Nokia's favor, particularly in the optical networking segment. The company's acquisition of Infinera positions it to better challenge market leader Ciena, especially as AI data-center demand for optical networking accelerates. Jefferies analysts have highlighted that the combined entity will have stronger ground against Ciena in this rapidly growing market. However, not all segments are thriving; Fixed Networks sales declined 13% in the first quarter, and lead times across the AI supply chain are extending. Some new optical products won't begin sampling until mid-2027, with volume production only in the second half of that year.
Insider activity has provided a counterpoint to the recent selling pressure. Nokia's Chief Development Officer Konstanty Owczarek purchased 37,405 ADRs on May 26 at just under $16 each, a transaction worth approximately $600,000, following a similar $500,000 purchase on May 22. Such insider buying often signals confidence in the company's prospects, though it has not stemmed the current tide of profit-taking.
The key risk for Nokia is that the stock's rapid re-rating has outpaced the underlying business fundamentals. If hyperscalers — the large cloud companies building AI data centers — slow their spending, or if orders slip into later quarters, the market may lose patience. For now, the AI case has strengthened, but Friday's move suggests the stock must prove it has not run too far ahead of the numbers.
