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NOK Stock Increases 16.2% in Six Months: What Should Investors Do?
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Key Takeaways
Nokia's AI & Cloud revenue more than doubled year over year in the second quarter of 2026.
Nokia expects about half of 2.8 billion euro in AI & Cloud orders to convert into revenue within 12 months.
Nokia trades at 23.8 times forward earnings, below the industry's 29.51 but above its 20.02 mean.
Nokia Corporation (NOK - Free Report) shares have gained 16.2% in the past six months against the industry’s decline of 12.3%. The stock has underperformed the Zacks Computer & Technology sector but outperformed the S&P 500 during the same time frame.
Image Source: Zacks Investment Research
The company has outperformed its peers like Ericsson (ERIC - Free Report) but underperformed Arista Networks, Inc. (ANET - Free Report) . Shares of Ericsson have declined 20.4%, and shares of Arista have risen 48.4%.
Key Growth Drivers for NOK
Nokia’s Optical Networks and IP Networks business is benefiting from rapid exposure of AI infrastructure business. During the second quarter of 2026, AI & Cloud revenues more than doubled year over year, while AI & Cloud order intake reached €2.8 billion. Management noted that approximately half of these long-term orders are expected to convert into revenues over the next 12 months, while emphasizing that quarterly order patterns are likely to remain uneven. Nokia is also expanding partnerships with cloud providers and enterprise customers to accelerate AI-enabled networking, autonomous network operations and data center connectivity.
Nokia boasts a broad portfolio consisting of 26,000 patent families, including more than 8,000 declared essential to 5G standards. The company is also rapidly venturing into 5G, Open RAN, AI-native networking and 6G technologies. This will likely provide the company several avenues of monetization in the long run.
Expansion into AI-driven network automation can be another growth avenue. Nokia is increasingly using AI to automate telecom-network operations. Its expanded relationship with Microsoft involves integrating Nokia Data Suite with Microsoft Fabric, supporting applications such as automated root-cause analysis and predictive maintenance. Such innovation bodes well for sustainable growth.
Nokia is reducing its exposure to businesses that have weaker strategic prospects. It is redirecting resources toward AI networking and optical technologies. The planned divestiture of the Fixed Wireless Access CPE business is expected to simplify the portfolio.
Major Challenges for NOK
Despite growing exposure to AI networking, Nokia’s core business still depends heavily on telecom operators. Telecom spending fluctuates heavily. This is leading to uneven revenue and profitability across investment cycles.
Nokia operates in markets where Ericsson, Cisco, Arista and other networking players are also investing heavily in 5G, AI infrastructure, automation and next-generation networks. Maintaining technology leadership while preserving pricing discipline remains essential as customers balance network modernization against capital spending constraints.
Nokia operates across multiple geographic markets and remains exposed to changes in trade policy, regulation and geopolitical developments. Its international manufacturing and supply-chain footprint can also make project execution more complicated.
Estimate Revision Trend
The company’s earnings estimates for 2026 have remained unchanged, and 2027 have declined over the past 60 days.
Image Source: Zacks Investment Research
Key Valuation Metric of NOK
From a valuation standpoint, NOK is currently trading at a discount compared to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 23.8 forward earnings, lower than 29.51 for the industry and above its mean of 20.02.
Image Source: Zacks Investment Research
End Note
Strong AI & Cloud demand and double-digit Network Infrastructure growth are major tailwinds for the company. Nokia's extensive technology portfolio boosts commercial prospects. However, cyclical telecom spending, intense competition and substantial restructuring costs will likely impact its growth prospects in the near term. With a Zacks Rank #3 (Hold), Nokia appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
NOK Stock Increases 16.2% in Six Months: What Should Investors Do?
Key Takeaways
Nokia Corporation (NOK - Free Report) shares have gained 16.2% in the past six months against the industry’s decline of 12.3%. The stock has underperformed the Zacks Computer & Technology sector but outperformed the S&P 500 during the same time frame.
Image Source: Zacks Investment Research
The company has outperformed its peers like Ericsson (ERIC - Free Report) but underperformed Arista Networks, Inc. (ANET - Free Report) . Shares of Ericsson have declined 20.4%, and shares of Arista have risen 48.4%.
Key Growth Drivers for NOK
Nokia’s Optical Networks and IP Networks business is benefiting from rapid exposure of AI infrastructure business. During the second quarter of 2026, AI & Cloud revenues more than doubled year over year, while AI & Cloud order intake reached €2.8 billion. Management noted that approximately half of these long-term orders are expected to convert into revenues over the next 12 months, while emphasizing that quarterly order patterns are likely to remain uneven. Nokia is also expanding partnerships with cloud providers and enterprise customers to accelerate AI-enabled networking, autonomous network operations and data center connectivity.
Nokia boasts a broad portfolio consisting of 26,000 patent families, including more than 8,000 declared essential to 5G standards. The company is also rapidly venturing into 5G, Open RAN, AI-native networking and 6G technologies. This will likely provide the company several avenues of monetization in the long run.
Expansion into AI-driven network automation can be another growth avenue. Nokia is increasingly using AI to automate telecom-network operations. Its expanded relationship with Microsoft involves integrating Nokia Data Suite with Microsoft Fabric, supporting applications such as automated root-cause analysis and predictive maintenance. Such innovation bodes well for sustainable growth.
Nokia is reducing its exposure to businesses that have weaker strategic prospects. It is redirecting resources toward AI networking and optical technologies. The planned divestiture of the Fixed Wireless Access CPE business is expected to simplify the portfolio.
Major Challenges for NOK
Despite growing exposure to AI networking, Nokia’s core business still depends heavily on telecom operators. Telecom spending fluctuates heavily. This is leading to uneven revenue and profitability across investment cycles.
Nokia operates in markets where Ericsson, Cisco, Arista and other networking players are also investing heavily in 5G, AI infrastructure, automation and next-generation networks. Maintaining technology leadership while preserving pricing discipline remains essential as customers balance network modernization against capital spending constraints.
Nokia operates across multiple geographic markets and remains exposed to changes in trade policy, regulation and geopolitical developments. Its international manufacturing and supply-chain footprint can also make project execution more complicated.
Estimate Revision Trend
The company’s earnings estimates for 2026 have remained unchanged, and 2027 have declined over the past 60 days.
Image Source: Zacks Investment Research
Key Valuation Metric of NOK
From a valuation standpoint, NOK is currently trading at a discount compared to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 23.8 forward earnings, lower than 29.51 for the industry and above its mean of 20.02.
Image Source: Zacks Investment Research
End Note
Strong AI & Cloud demand and double-digit Network Infrastructure growth are major tailwinds for the company. Nokia's extensive technology portfolio boosts commercial prospects. However, cyclical telecom spending, intense competition and substantial restructuring costs will likely impact its growth prospects in the near term. With a Zacks Rank #3 (Hold), Nokia appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.