Nokia (NOK) Stock: Why Shares Tanked Despite Strong AI Revenue Growth

TLDR

• Nokia reported Q4 2025 revenue of €6.1 billion, up 3% year-over-year, driven by AI and cloud infrastructure demand
• Comparable operating profit of €1.06 billion missed prior year’s €1.09 billion as margins compressed to 17.3%
• Network Infrastructure jumped 19% while Mobile Networks fell 1.7%, showing the company’s ongoing business transformation
• 2026 operating profit guidance of €2.0-€2.5 billion fell 5% short of analyst consensus at €2.37 billion
• Stock declined 5.8% in early European trading as investors digested the weaker-than-expected outlook

Nokia posted solid fourth quarter revenue Thursday but disappointed Wall Street with conservative 2026 guidance, sending shares down 5.8% in early trading.

The Finnish equipment maker reported Q4 revenue of €6.1 billion, matching analyst forecasts. Year-over-year growth hit 3% on a constant currency basis, with AI and cloud customers driving the expansion.

Nokia Oyj, NOK

CEO Justin Hotard’s pivot toward data center markets delivered results. The Network Infrastructure division grew 19% as demand for AI infrastructure accelerated. Optical Networks, critical for data center connectivity, posted 17% growth within that segment.

“Order intake was strong across Optical and IP Networks, with book-to-bill remaining above one, driven by demand from AI & Cloud customers,” Hotard stated.

Comparable operating profit reached €1.06 billion for the quarter, down from €1.09 billion a year earlier. Operating margin fell 90 basis points to 17.3%. Nokia attributed the compression to growth investments, including integrating Infinera, its recent optical networking acquisition.

The company reported €0.16 in comparable diluted EPS and €0.10 in reported diluted EPS. Net cash stood at €3.4 billion at quarter end.

Mobile Business Stabilizes Amid Decline

Mobile Networks revenue dropped 1.7% as North American carrier spending weakened. Growth in the Middle East, Japan, and Indonesia partially offset the decline.

The unit’s gross margin improved to 40.1% from 37.3%, indicating stabilization despite revenue pressure. For full-year 2025, Nokia achieved 2% constant currency revenue growth with €2.0 billion in comparable operating profit and €1.5 billion in free cash flow.

Group comparable net profit hit €880 million, beating the €834 million consensus. The company took full ownership of its China joint venture during the quarter for €0.5 billion in cash.

2026 Guidance Triggers Selloff

Nokia’s 2026 outlook sparked the stock decline. The company guided for €2.0-€2.5 billion in comparable operating profit. The €2.25 billion midpoint trails consensus by roughly 5%.

J.P. Morgan analysts expect “mid-single digit downgrades to consensus” following the guidance miss.

Nokia projects 6-8% Network Infrastructure growth in 2026, aligning with long-term targets. However, management warned Q1 2026 revenue would decline more than seasonal norms, with operating margin rising only slightly year-over-year.

The board proposed €0.14 per share dividend authorization for 2025. Chair Sari Baldauf will step down, with Timo Ihamuotila nominated as replacement. Meredith Whittaker from Signal Technology Foundation received a board nomination.