HELSINKI, July 27, 2026, 11:23 EEST — Trading in Helsinki begins.
- Nokia shares were down 1.85% at €8.07 as of 11:13 EEST. The stock traded ex-dividend by €0.04.
- AI and cloud revenue in the second quarter rose 100% to €446 million, with related orders totaling €2.8 billion.
- Initial midpoint estimates suggest Nokia could require approximately €1.63 billion in free cash flow for the second half.
Nokia’s stock declined on Monday, even after the company reported a solid profit beat for the second quarter. Investor focus has moved from securing AI-related contracts to generating cash. Some of the day’s drop was due to the adjustment for the dividend.
The stock underperformed compared to the wider market. Earlier on Monday, the STOXX 600 had gained 0.8%.
AI and cloud clients accounted for just 9.3% of Nokia’s group revenue in the quarter. However, they contributed roughly 61% of the company’s annual revenue growth. This level of reliance means there is less flexibility for postponed shipments.
Initial estimates show that the profit-guidance midpoint stands at €2.35 billion. Using the midpoint of the conversion range, 65%, this results in €1.53 billion in yearly free cash flow. Given the €104 million outflow in the first half, the second half will need to achieve approximately €1.63 billion.
This equates to roughly 2.4 times Nokia’s estimated result for the latter half of 2025. The company reported €1.5 billion for the full year 2025, including €809 million in the first six months.
The underlying result for the second quarter was robust. Comparable operating profit climbed 18% to €434 million, beating analyst forecasts of €382 million. Sales advanced 8% to €4.815 billion.
The sales bridge illustrates the portion of growth attributed to AI customers:
| Customer group | Q2 2026 sales | Reported growth | Contribution to group sales increase |
|---|---|---|---|
| Telecom providers | €3.514 billion | 3% | 28% |
| AI and Cloud | €446 million | 103% | 61% |
| Mission Critical Enterprise and Defense | €448 million | -3% | -3% |
| Technology Licensees | €407 million | 14% | 13% |
Figures are rounded. The contribution column measures each group’s change against Nokia’s overall rise of €372 million.
Order volumes significantly exceeded current revenue, with AI and cloud order intake reaching 6.3 times Nokia’s quarterly sales. The company anticipates about half of these orders will be realised in the next 12 months.
“Demand is still strong, but supply remains the primary constraint facing the industry,” Chief Executive Justin Hotard said. Extended commitments increase visibility yet can also mean maintaining higher inventory levels before receiving payment from customers. Reuters
Cash flow already showed signs of strain. Free cash flow for the second quarter came in at a negative €732 million. Working-capital outflows totaled €1.15 billion, driven by increased inventories and receivables. Net cash declined 27% from the prior quarter, reaching €2.776 billion.
Nokia posted a €50 million operating loss for the period, impacted by €390 million in restructuring charges, as reported earnings showed a significant gap from adjusted profit. The company forecasts restructuring-related cash outflows to total between €700 million and €800 million this year.
The headline guidance boost does not provide significant new insight on demand. Nokia adjusted its range to €2.1 billion–€2.6 billion following the reclassification of two units as discontinued operations. The company stated its operational view has not changed.
Execution is still largely weighted towards the later part of the year. Nokia anticipates that comparable operating profit will remain roughly unchanged in the third quarter, before seeing a significant uptick in the fourth quarter. Sequential sales growth for the third quarter is predicted at 3% to 7%.
Peer comparisons provide minimal respite. Ericsson STO:ERIC-B has cautioned that higher memory-chip prices are squeezing margins on equipment. This reinforces Nokia’s position that supply limitations continue to impact the entire industry.
Risks: Accelerated customer payments may offset working-capital pressure and significantly boost cash. Margins and order conversion could come under threat from shipment hold-ups, higher component costs or softer cloud demand.
Nokia is set to announce its third-quarter results on October 22. The focus may shift to receivables, inventory and the conversion of AI orders, which could prove more significant than a new headline order number.
