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AT&T vs. Nokia: Which Telecom Stock Is the Better Buy Now?
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Key Takeaways
AT&T and Nokia are pursuing different strategies across the evolving telecom ecosystem.
AI and cloud computing are creating new growth opportunities for both companies.
T and NOK face differing dynamics around growth, cash flow, market competition and valuation.
The telecom industry is entering a new phase as AI, cloud computing and other bandwidth-intensive applications reshape network requirements. The growing use of AI workloads is increasing the need for high-capacity fiber and low-latency connectivity.
Nokia Corporation (NOK - Free Report) and AT&T Inc. (T - Free Report) occupy distinct positions within the emerging telecom ecosystem. Nokia is a network technology provider with exposure to optical, IP and mobile infrastructure. Meanwhile, AT&T is a major connectivity provider built around fiber, wireless and 5G networks.
Growing AI adoption has created new drivers across the telecom ecosystem. Let’s analyze in depth the competitive strengths and weaknesses of the companies to understand whether Nokia or AT&T is in a better position to maximize gains from the emerging opportunities.
The Case for T
AT&T’s continued rollout of fiber and 5G networks remains a key growth engine. The company expects to reach 8 million additional fiber locations, including more than 4 million locations from the Lumen footprint. In the second quarter of 2026, AT&T added more than 1 million customers across fiber, fixed wireless and postpaid phones.
AT&T is increasingly combining home broadband and wireless services to strengthen customer relationships and improve the economics of its network investments. At the end of the second quarter of 2026, 42.5% of its advanced home Internet customers also had an AT&T postpaid wireless account. Its convergence strategy simplifies the customer experience, increases customer lifetime value and helps reduce churn.
Edge computing and AI-ready services can be another major tailwind for the company. T expects connectivity demand tied to AI and data-intensive applications to increase network traffic over time. Management has highlighted dense fiber, 5G backhaul, spectrum depth and nationwide MEC partnerships as enablers for latency-sensitive workloads, with more than 20 metro MEC zones live and more than 150 active private 5G and edge trials as of the second quarter.
In August 2026, AT&T introduced Video Intelligence with EdgeVis Cloud, moving its existing IoT video offering toward a managed cloud model that combines optimized video streaming, secure transmission, analytics and alerting across cellular, wired and Wi-Fi connections. The offering targets enterprise, mid-market, large SMB and public-sector use cases and supports fixed and mobile installations.
AT&T offers relatively clear visibility into shareholder returns, supported by its improving cash generation and stronger operating performance. The company returned $4.1 billion to shareholders in the second quarter of 2026, including roughly $2.2 billion through share repurchases. Management now expects to repurchase approximately $10 billion of stock in 2026, up from its earlier target of $8 billion. The company’s free cash flow outlook further supports this capital-return strategy. AT&T expects more than $18 billion of free cash flow in 2026 and plans to direct a substantial portion of it toward dividends and buybacks.
The Case for Nokia
AI and cloud spending has emerged as Nokia’s most important growth driver recently. In the second quarter of 2026, Nokia’s AI & Cloud sales increased 105% year over year, while order intake reached €2.8 billion. Nokia’s Network Infrastructure business is benefiting directly from the expansion of AI and data-center capacity.
Nokia is working with customers and technology partners to incorporate AI into network operations. Its initiatives include AI-powered network slicing, autonomous network management and AI agents for network operations. Its newly launched AI-RAN platform is designed to help operators extract more capacity from existing spectrum while allowing radio networks to evolve through software rather than requiring major hardware replacements. The company said that the platform is likely to deliver more than 100% spectral-efficiency gains by 2028 and provide a software path toward 6G. These developments could create additional opportunities as telecom operators seek to automate networks and optimize resources.
However, Nokia’s transformation initiative is creating a near-term drag on reported profitability. The company accelerated its restructuring initiatives and now expects €800 million of restructuring-related charges in 2026. The impact was already visible in the second quarter. Although comparable operating profit increased 18% to €434 million, Nokia reported an operating loss of €50 million, largely because of €390 million in restructuring and associated charges. Strong operating performance has not yet translated consistently into cash flow. Nokia generated negative free cash flow of €732 million in the second quarter of 2026.
Despite Nokia’s efforts to expand its AI networking portfolio, more than half of its revenue still comes from the Mobile Infrastructure segment, keeping the company heavily exposed to the traditional telecom equipment market. Ericsson (ERIC - Free Report) remains a key rival in this domain, particularly across radio access and core network technologies. Ericsson boasts a comprehensive portfolio of 60,000 granted patents. A highly skilled team makes this possible, while close collaboration with customers ensures quick uptake, driving sustainable growth. About 50% of 5G traffic outside China runs on Ericsson networks. This highlights the competitive pressure Nokia faces in its core mobile-network markets. In the AI networking space, it faces competition from Arista. Such fierce competition across several end markets is impacting Nokia’s prospects to some extent.
How Do Zacks Estimates Compare for T & NOK?
The Zacks Consensus Estimate for T’s 2026 sales and EPS implies year-over-year growth of 2.88% and 10.85%, respectively. The EPS estimates for 2026 have moved northward over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NOK’s 2026 sales implies year-over-year growth of 5.57%, while the same for EPS suggests an increase of 18.18%. The EPS estimate for 2026 has declined over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of T & NOK
Over the past year, T stock has lost 13.4% compared to NOK’s surge of 129.8%.
Image Source: Zacks Investment Research
AT&T looks more attractive than Nokia from a valuation standpoint. Going by the price/earnings ratio, NOK’s shares currently trade at 22.85 forward earnings, significantly higher than 10.2 for T.
Both companies are taking several steps to strengthen their prospects in the AI-driven telecom ecosystem. Nokia’s strongest growth drivers are its expanding exposure to AI and cloud infrastructure, along with AI-RAN, 5G and future 6G opportunities. However, restructuring charges, negative free cash flow and stiff competition across several verticals are concerning.
AT&T’s growth story is centered on fiber expansion, 5G scale and converged customer adoption. The accelerating adoption of generative, agentic and autonomous AI is creating a significant long-term opportunity for AT&T. Its stronger free cash flow growth and focus on increasing returns to shareholders are a major positive. Owing to these factors, T is a better investment choice at present.
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AT&T vs. Nokia: Which Telecom Stock Is the Better Buy Now?
Key Takeaways
The telecom industry is entering a new phase as AI, cloud computing and other bandwidth-intensive applications reshape network requirements. The growing use of AI workloads is increasing the need for high-capacity fiber and low-latency connectivity.
Nokia Corporation (NOK - Free Report) and AT&T Inc. (T - Free Report) occupy distinct positions within the emerging telecom ecosystem. Nokia is a network technology provider with exposure to optical, IP and mobile infrastructure. Meanwhile, AT&T is a major connectivity provider built around fiber, wireless and 5G networks.
Growing AI adoption has created new drivers across the telecom ecosystem. Let’s analyze in depth the competitive strengths and weaknesses of the companies to understand whether Nokia or AT&T is in a better position to maximize gains from the emerging opportunities.
The Case for T
AT&T’s continued rollout of fiber and 5G networks remains a key growth engine. The company expects to reach 8 million additional fiber locations, including more than 4 million locations from the Lumen footprint. In the second quarter of 2026, AT&T added more than 1 million customers across fiber, fixed wireless and postpaid phones.
AT&T is increasingly combining home broadband and wireless services to strengthen customer relationships and improve the economics of its network investments. At the end of the second quarter of 2026, 42.5% of its advanced home Internet customers also had an AT&T postpaid wireless account. Its convergence strategy simplifies the customer experience, increases customer lifetime value and helps reduce churn.
Edge computing and AI-ready services can be another major tailwind for the company. T expects connectivity demand tied to AI and data-intensive applications to increase network traffic over time. Management has highlighted dense fiber, 5G backhaul, spectrum depth and nationwide MEC partnerships as enablers for latency-sensitive workloads, with more than 20 metro MEC zones live and more than 150 active private 5G and edge trials as of the second quarter.
In August 2026, AT&T introduced Video Intelligence with EdgeVis Cloud, moving its existing IoT video offering toward a managed cloud model that combines optimized video streaming, secure transmission, analytics and alerting across cellular, wired and Wi-Fi connections. The offering targets enterprise, mid-market, large SMB and public-sector use cases and supports fixed and mobile installations.
AT&T offers relatively clear visibility into shareholder returns, supported by its improving cash generation and stronger operating performance. The company returned $4.1 billion to shareholders in the second quarter of 2026, including roughly $2.2 billion through share repurchases. Management now expects to repurchase approximately $10 billion of stock in 2026, up from its earlier target of $8 billion. The company’s free cash flow outlook further supports this capital-return strategy. AT&T expects more than $18 billion of free cash flow in 2026 and plans to direct a substantial portion of it toward dividends and buybacks.
The Case for Nokia
AI and cloud spending has emerged as Nokia’s most important growth driver recently. In the second quarter of 2026, Nokia’s AI & Cloud sales increased 105% year over year, while order intake reached €2.8 billion. Nokia’s Network Infrastructure business is benefiting directly from the expansion of AI and data-center capacity.
Nokia is working with customers and technology partners to incorporate AI into network operations. Its initiatives include AI-powered network slicing, autonomous network management and AI agents for network operations. Its newly launched AI-RAN platform is designed to help operators extract more capacity from existing spectrum while allowing radio networks to evolve through software rather than requiring major hardware replacements. The company said that the platform is likely to deliver more than 100% spectral-efficiency gains by 2028 and provide a software path toward 6G. These developments could create additional opportunities as telecom operators seek to automate networks and optimize resources.
However, Nokia’s transformation initiative is creating a near-term drag on reported profitability. The company accelerated its restructuring initiatives and now expects €800 million of restructuring-related charges in 2026. The impact was already visible in the second quarter. Although comparable operating profit increased 18% to €434 million, Nokia reported an operating loss of €50 million, largely because of €390 million in restructuring and associated charges. Strong operating performance has not yet translated consistently into cash flow. Nokia generated negative free cash flow of €732 million in the second quarter of 2026.
Despite Nokia’s efforts to expand its AI networking portfolio, more than half of its revenue still comes from the Mobile Infrastructure segment, keeping the company heavily exposed to the traditional telecom equipment market. Ericsson (ERIC - Free Report) remains a key rival in this domain, particularly across radio access and core network technologies. Ericsson boasts a comprehensive portfolio of 60,000 granted patents. A highly skilled team makes this possible, while close collaboration with customers ensures quick uptake, driving sustainable growth. About 50% of 5G traffic outside China runs on Ericsson networks. This highlights the competitive pressure Nokia faces in its core mobile-network markets. In the AI networking space, it faces competition from Arista. Such fierce competition across several end markets is impacting Nokia’s prospects to some extent.
How Do Zacks Estimates Compare for T & NOK?
The Zacks Consensus Estimate for T’s 2026 sales and EPS implies year-over-year growth of 2.88% and 10.85%, respectively. The EPS estimates for 2026 have moved northward over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NOK’s 2026 sales implies year-over-year growth of 5.57%, while the same for EPS suggests an increase of 18.18%. The EPS estimate for 2026 has declined over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of T & NOK
Over the past year, T stock has lost 13.4% compared to NOK’s surge of 129.8%.
Image Source: Zacks Investment Research
AT&T looks more attractive than Nokia from a valuation standpoint. Going by the price/earnings ratio, NOK’s shares currently trade at 22.85 forward earnings, significantly higher than 10.2 for T.
Image Source: Zacks Investment Research
T or NOK: Which is a Better Pick?
Presently, AT&T and Nokia carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Both companies are taking several steps to strengthen their prospects in the AI-driven telecom ecosystem. Nokia’s strongest growth drivers are its expanding exposure to AI and cloud infrastructure, along with AI-RAN, 5G and future 6G opportunities. However, restructuring charges, negative free cash flow and stiff competition across several verticals are concerning.
AT&T’s growth story is centered on fiber expansion, 5G scale and converged customer adoption. The accelerating adoption of generative, agentic and autonomous AI is creating a significant long-term opportunity for AT&T. Its stronger free cash flow growth and focus on increasing returns to shareholders are a major positive. Owing to these factors, T is a better investment choice at present.