Nokia Q3 2026: Strong AI growth, but shares tumble

Nokia reported strong financial results for the third quarter of 2026, with revenue reaching €5.15 billion, up 10% year-on-year. Comparable operating profit jumped 35% to €605 million, while the operating margin improved to 11.7%.

The biggest success came from AI and cloud infrastructure, where sales surged 123% and new orders reached €1.5 billion. IP Networks grew 43%, Optical Networks increased 18%, and Mobile Infrastructure recorded 5% growth.

CEO Justin Hotard expects the combined Optical and IP Networks businesses to grow another 25–30% in 2027, highlighting Nokia’s increasingly important role in connecting AI data centres. The integration of Infinera is also progressing faster than originally planned.

Why did Nokia shares fall?

Despite beating market expectations, Nokia shares dropped almost 10% in Helsinki on October 22, the day the results were published.

Investors appeared concerned about weaker cash generation, increased restructuring costs of €1.1 billion and an additional €400 million investment in working capital. Nokia lowered its expected free cash flow conversion to 35–55%, although its full-year operating profit outlook remains unchanged at €2.1–2.6 billion.

What does this mean for Nokia stock?

Nokia’s transformation into a major AI networking infrastructure supplier is clearly gaining momentum. However, the stock market is looking beyond revenue growth and demanding stronger cash flow and sustainable profitability.

The outlook is promising, but volatility could continue. If Nokia delivers its ambitious 2027 growth targets while improving cash generation, its shares could recover and attract renewed investor interest. Failure to turn strong AI demand into higher cash flow could keep pressure on the stock.

For Nokia, the opportunity is substantial. The next challenge is proving that rapid growth can translate into lasting shareholder value.

Source: Nokia Q3 2026 Interim Report.