Nokia surges after securing EUR 2.8 billion in AI contracts amid key conversion challenge

Nokia Oyj gained 5.9% to reach 8.58 euros as of 14:48 EEST, outperforming the OMX Helsinki 25 by 4.66 percentage points. Investors are primarily concerned with how fast orders are converted into revenue. In Q2, Nokia reported 2.8 billion euros in AI and cloud orders, a figure that is 2.8 times higher than the 1 billion euros recorded in Q1. Nokia Chief Executive Justin Hotard stated the company anticipates around half of these orders to convert to revenue over the next twelve months, suggesting revenue near 1.4 billion euros over 12 months. This figure is 17.2% of Q2 Network Infrastructure sales when annualized, and 7.3% of annualized total group sales. The earnings composition backs the order outlook. Comparable operating profit increased by 18% to 434 million euros. Nokia posted 20% growth in optical and 16% in IP during Q2. Network Infrastructure sales reached 2.037 billion euros, up 12% year-over-year. AI and cloud customer sales increased 105%. Nokia maintains its full-year comparable operating profit forecast at 2.1 billion to 2.6 billion euros. Management forecasts Q3 sales to increase by 3% to 7% compared with the previous quarter. Valuation remains a limiting factor: Nokia traded at a price-to-earnings ratio of 67.6 times, while Ericsson stood at 13.0 times. Risks include revenue recognition delays due to supply constraints and restructuring charges of 800 million euros this year.