Nokia’s 138% Run Has A Margin Problem

The stock’s incredible run had little to do with its past and everything to do with a future the market suddenly decided to believe in.

Remember Nokia (NOK)? For years, the name was a ghost of markets past, a reminder of indestructible phones and a lost empire. So you might have blinked when you saw its stock put up a +138.3% return over the last 12 months, leaving the S&P 500’s +21.1% gain in the dust. This performance pointed away from a sudden comeback in handsets and toward the market finally waking up to Nokia’s quiet, deliberate pivot into the one thing that matters now: the plumbing for artificial intelligence.

Image by Hermann Traub from Pixabay

What Changed The Narrative?
For months, the stock was building steam, but the real fireworks started in the first quarter of 2026. In a rapid-fire sequence, Nokia dropped a series of deals that looked nothing like the old telecom equipment supplier. It announced a collaboration with Stelia AI for enterprise-scale projects. It partnered with AirHop to bake AI into network automation. It teamed up with Blaize and Datacomm Diangraha to push AI inference hardware across Southeast Asia. And for good measure, its Nokia Federal Solutions arm landed a spot on a U.S. Missile Defense Agency contract vehicle with a ceiling of $151B. Suddenly, who were Nokia’s customers? The company was now selling beyond telcos and into the heart of the AI and defense buildout.

Is This AI Story Showing Up In The Financials?
This is where it gets interesting. The pivot is starting to leave a mark on the top line. After years of shrinking, with a 3-year average revenue growth of -5.8%, the company’s sales have inflected, growing 4.3% over the last twelve months to €20.0 billion (~$23.1 billion). One of its new partners, Datacomm, even reported a “50%+ surge in customer AI inference demand over the past six months,” giving a glimpse of the real-world pull. But look at the bottom line, and you’ll see the cost of this transformation. Net margin is just 4.0%, well below its 3-year average of 7.8%. This is a company spending money to chase a large new opportunity. While some peers are also chasing AI orders, as we’ve noted with other big names in networking, Nokia’s story is one of a more fundamental reinvention.

The market has clearly bought the growth story, rewarding the potential of these new AI revenue streams. But with margins compressed during the transition, it leaves one critical question unanswered. Can it turn the AI hype into actual profit?

Does This Run Have Staying Power?

Knowing why a stock ran is one thing; knowing whether the run has legs is another. The most durable moves are the ones a rising forecast is actually backing, rather than a good week of sentiment. Our Guidance Momentum screen tracks the S&P 500 names where a raised outlook meets real price momentum, so you can judge which runs are built to last.

That staying-power question got a real-world test just yesterday. Nokia shares dropped sharply on July 2, closing at $12.07, a roughly 6.5% decline from the prior close of $12.91. It’s part of a broader retreat from the stock’s mid-June high near $15, and it’s a live reminder that a name up 138% on a 12-month view can still hand back several points in a single session when sentiment turns.

The Move Cuts Both Ways

A move like this is satisfying when you own the stock, but the same volatility that drove it up can just as easily drive it down. When one name is a large share of your wealth, a reversal is not a bad day; it is real damage, and trimming it hands a chunk to the IRS. There is a way to cap the downside and diversify out without the tax hit.

If you are looking to spread out your AI infrastructure risk, you don’t have to leave the hardware space entirely. Check out our breakdown on Marvell Stock: A Faster Lane On The Same Highway to see how it compares as a portfolio diversification play in the broader AI buildout.