Telecommunications Equipment · #52 in the Retail 100

Nokia

NOK

Our rating: hold
12-month target: $10.08 +18.8%
Expected vs. S&P 500: +1.7 ptsSee the math
Next earnings: Jan 28In 84 daysEarnings calls page ↗

Nokia is tying up €400M more cash this year to secure supply, even as orders from AI and cloud customers fell to €1.5B from €2.8B.

Summary

Nokia sells the equipment that carries internet and phone traffic, from optical and IP networking gear to mobile radio networks, plus patent licenses. AI data centers are now its fastest-growing customers, while the older mobile and licensing businesses still earn most of the profit. But Nokia is spending heavily on supply and restructuring, and its U.S.-traded shares fell 15% on results day. The stock depends on AI orders turning into enough cash to reach its 2028 profit target.

$8.48

+$2.77 (+48.51%)Past year

What Nokia does

Nokia sells the equipment that carries phone and internet traffic, and licenses its mobile patents. Carrier spending rises and falls with each network upgrade, so Nokia is moving toward gear for AI data centers.^1,6,35

What it sells

Mobile radio networks37% of revenue, Q2 2026
Radio equipment on cell towers for 4G and 5G networks. Sales rise and fall with carriers' upgrade cycles.
Optical networks18% of revenue, Q2 2026
Gear that sends data as light through fiber, between cities and between data centers. Expanded by the 2025 purchase of Infinera.
IP routing14% of revenue, Q2 2026
Routers that direct internet traffic for carriers, cloud companies, businesses and governments.
Core network software11% of revenue, Q2 2026
Software that runs a carrier's network behind the cell towers, handling calls, data and subscriber accounts.
Patent licensing8% of revenue, Q2 2026
Fees from phone makers, carmakers and others to use Nokia's patents. In 2025 the unit kept 71% of its sales as operating profit.

Who buys it

Phone and internet carriers, cloud companies, businesses and governments. No single customer reached 10% of 2025 sales. Most major smartphone makers and most Western carmakers pay patent fees, among more than 250 licensees.

Where you've seen it

Nokia's radio gear sits on many cell towers, and most major smartphone makers pay to use its patents.

The backstory

Under former CEO Pekka Lundmark, Nokia's sales fell 9% in 2024, mostly because 5G rollouts in India had peaked. Lundmark agreed to buy U.S. optical maker Infinera for $2.3 billion, a deal that closed in February 2025. Justin Hotard, who ran Intel's data center and AI group, took over in April 2025 and is steering Nokia toward AI data centers, backed by a $1 billion stake from Nvidia.

How the business makes money

Why Nokia's old businesses pay for its AI bet^{1,3,4,5,6,7,8,10,28,30}

Step 1
Mobile networks and patent licenses earn steady profit. Licensing kept about 71¢ of each $1 of sales as profit in 2025.
Step 2
That cash funds a shift to optical and IP gear for AI data centers, where AI and cloud customers are now 12% of sales.
Step 3
AI customers order well ahead, and most orders become sales within a year. Supply, not demand, limits shipments, so Nokia is adding factory capacity.
Step 4
Cost cuts fund the shift but cost money first: €800 to 900 million of restructuring paid in cash.
What shareholders get
The stock is betting AI orders lift yearly profit, on Nokia's own measure, to €2.7 to 3.2 billion by 2028, up from €2.0 billion in 2025.

Advantages

Makes its own optical chips

Strong advantage

Strong, because supply is what limits sales. Infinera brought optical chip production in-house, and Nokia is expanding Pennsylvania testing tenfold and will lease, then buy, part of NXP's Arizona plant.^1,6,28

A large patent portfolio

Strong advantage

Strong and very profitable. Licensing brought in €1,217 million of sales in the first nine months. In 2024 the old Nokia Technologies unit kept 78.5% of sales as profit.^28,4

Partnership with Nvidia

Supporting

Useful but early. Nvidia now owns 2.9% of Nokia, and in Q3 Nokia, T-Mobile and Nvidia completed the first AI-RAN call on a live network.^8,9,28

What's changing

AI orders ship, but cash and costs come first

Nokia held its 2026 profit outlook and expects to finish above the midpoint, helped by a 20 to 24% jump in Q4 sales from Q3. Its finance chief said part of Q3's strength was pulled forward from Q4. Free cash flow was negative €99 million in the quarter. The U.S.-traded shares now sit 53% below their June peak.^28,29,30

Competitors

Who else an investor would consider, and how they compare.

Company	Market value	What it does	Compared with Nokia
Nokiathis stock	$50.43B	Nokia sells the equipment that carries phone and internet traffic, and licenses its mobile patents. Carrier spending rises and falls with each network upgrade, so Nokia is moving toward gear for AI data centers.
EricssonERIC	$36.51B	Swedish maker of mobile network radio gear for telecom operators.	Ericsson bets mostly on mobile radio; Nokia leans more on data center networking.
CienaCIEN	$47.66B	Sells optical gear that moves data over fiber, to cloud companies and telecoms.	Ciena does optical only; Nokia also earns from mobile networks and patent licensing.
CiscoCSCO	$434.71B	The largest networking company, selling the routers and switches that run data centers.	Cisco owns the data center installed base; Nokia's IP routing is the challenger.
Huawei (private)private	—	China's telecom gear giant, selling low-cost mobile and optical equipment worldwide.	Huawei is barred from much of the West, leaving those networks to Nokia and Ericsson.

Leadership

Who runs the company, and how the stock has done under the CEO.

NOK +65.6%S&P 500 +36.7%Total return with dividends since Apr 2025

2026

Justin HotardPresident and CEO1.5 yrs

Marco WirénCFO6.1 yrs, since 2020

David HeardPresident, Network Infrastructure1.3 yrs

When Hotard was named (Feb 2025), the stock moved +0.4% that day; the S&P 500 moved +0.7%.

Wall Street on Hotard: PositiveBofA upgraded the stock to Buy on demand for its fiber-optic networking gear from AI data centers. Rosenblatt started covering it at Buy, calling Nokia an AI fiber-optics business priced like a phone-network company.^L5,L6

Leadership sources (6) · researched Oct 2026

L1Inside information: Nokia announces a leadership transition – Justin Hotard appointed as successor to Pekka Lundmark · Nokia, 2025-02-10
L2Marco Wirén appointed Chief Financial Officer of Nokia; Kristian Pullola to step down · Nokia, 2020-06-11
L3Nokia taps former Infinera CEO David Heard to lead Network Infrastructure group · Converge Digest, 2025-06-16
L4Nokia (NOK) Q2 2026 Earnings Call Transcript · Yahoo Finance, 2026-07-23
L5BofA upgrades Nokia to Buy on optical and hyperscaler growth; shares rise · Investing.com, 2026-04-13
L6Nokia Gets Buy Rating as Analyst Sees Undervalued AI Optical Play · BigGo Finance, 2026-09-15

Bull vs. bear: two bets on the same stock

1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
3
When results come in, the price moves toward whichever side was right, and that side makes money.

The question they disagree on

Will AI and cloud orders turn into enough sales and cash to lift comparable operating profit from €2.0 billion in 2025 to management's €2.7 to 3.2 billion target by 2028?^{28,29,30,31,34,27,1}

Bull case: why buyers buy

If Nokia secures supply and ships the AI order backlog while mobile and licensing hold steady, profit reaches the 2028 target.

AI is becoming a real business for Nokia. AI and cloud customers already make up 12% of group sales.
Profit beat expectations by a wide margin. Comparable operating profit rose 35% in Q3, well above the FactSet forecast.
Nokia expects growth to speed up next year. It sees 25 to 30% growth in 2027 for Optical and IP Networks combined.
The Infinera merger is ahead of schedule. Nokia now expects to finish integrating it by the end of 2026, a year early.

Bear case: why sellers sell

If supply costs and working capital absorb the profit while orders slow, profit falls short of the 2028 target and today's price still looks expensive.

AI orders are lumpy. Third-quarter orders came in at roughly half of Q2's €2.8 billion, and management says most, not all, convert to sales within a year.
Less profit is turning into cash. Nokia cut its 2026 cash conversion target to 35 to 55% of profit.
Restructuring costs keep rising. Nokia raised its 2026 charges to €1.1 billion. As a result, reported operating profit fell 22%.
The stock is no longer cheap. The ADR trades at about 17 times expected earnings for the next year. Its five-year median is near 13, by our estimates.

Where Delphi landsholdWe think today's price already weighs both sides fairly.See why

What to watch

The numbers that will settle the debate.

Sales to AI and cloud customers▲ improving

€631 million last quarter, up 123% at constant currency; new orders €1.5 billion, against €2.8 billion in Q2²⁸

Shows whether the order backlog is turning into revenue fast enough to reach the 2028 profit target.

Mobile Infrastructure operating profit▲ improving

€420 million last quarter, up 18%; margin 14.5%, from 12.9%^28,30

Radio networks, core software and licensing earn most of Nokia's profit and fund the AI expansion.

Patent licensing sales▲ improving

€425 million last quarter, up 8% at constant currency²⁸

Licensing, reported as Technology Standards, keeps most of its sales as profit, so small changes move group earnings.

Next earnings report

Jan 28

In 84 days

Earnings calls page ↗

Expected earnings per share: $0.17
Expected revenue: $7.08B

What to listen for: Whether Q4 sales rise the guided 20 to 24% from Q3, whether free cash flow turns positive, and whether AI and cloud orders recover from Q3's €1.5 billion.^28,30

What would prove this wrong

✕AI and cloud orders fall back toward quarterly sales for two quarters.
✕Component shortages and price rises push most AI orders past twelve months or cut profit.
✕2026 comparable operating profit misses the €2.1 to 2.6 billion range.
✕A major licensee declines to renew, cutting Technology Standards sales.

Our ratingHoldas of Nov 3 close, $8.48 · what ratings mean

Earnings should grow about 20% as AI orders ship, but at 17 times expected earnings, about 30% above its five-year median, expected returns only slightly beat the S&P 500.

12-month target: $10.08 (+18.8%)
Plus dividend: +1.4%
S&P 500, same method, with dividends: +18.5%
Expected vs the market: +1.7 points

The math behind the recommendation

Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.

Now $8.48

Target $10.08

bull case30% likely

$13.09 +54%

Optical and IP sales grow 25 to 30% in 2027 with supply secured, cash turns positive, and profit moves toward the top of the 2028 target.

$0.64 earnings per share × 20.6 = $13.09

base case50% likely

$9.49 +12%

Orders ship over the next twelve months as management described and profit lands above the 2026 midpoint, so earnings match forecasts for the year to September 2028.

$0.57 earnings per share × 16.6 = $9.49

bear case20% likely

$7.03 -17%

Component costs and working capital absorb the profit, orders slow from Q3's €1.5 billion, and the valuation drifts back toward its historical level.

$0.51 earnings per share × 13.8 = $7.03

Why these odds: Nokia beat profit forecasts for a third straight quarter, kept its 2026 outlook and expects to finish above the midpoint, but cut its cash conversion target. In 30 days one analyst raised estimates and none cut. The 2028 estimate is extended from 2027.

How the prices are built: Wall Street expects earnings per share of $0.57 for the year starting a year from now (analysts range from $0.45 to $0.70). Today the stock trades at 18 times next year's earnings per share; its five-year middle is 12.9. Because earnings per share is forecast to grow fast, valuations are cut 1%, since fast growth rarely keeps its price.^{28,29,30,31,33,34,18,19,27,15}

What tests the call: Q4 2026 results and cash conversion (Jan 28)

Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 23; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record

What the price assumes

At $8.48, Nokia is priced about like the average stock

Nokia trades at 18 times the earnings analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's earnings. That is pricier than it has been 80% of the time over the past five years, when the middle was 13.

Analysts expect earnings to grow about 21% the year after, against about 16% for the S&P 500. The S&P 500 trades at 19 times. The price assumes Nokia's earnings grow roughly in line with forecasts, with no premium for doing better.

Nokia multiple: 18×
S&P 500 multiple: 19×
Base case: +12%
Bear case: −17%

The skewOur bear case loses about $1.44 for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.

Last earnings

No reported quarters available.