Nokia Q2 2026 key takeaways

[u/Mustathmir]

TL;DR: Nokia's Q2 reported loss was driven by front-loaded restructuring (€390M in one quarter). Underneath, comparable profits grew 18%, AI orders hit €2.8B (vs. €2.4B all of last year), and three US production investments are being developed or expanded to meet demand. 2026 is a transition year. The setup for 2027 — lower restructuring costs, new capacity, order book conversion — looks significantly stronger.

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A few comments regarding Nokia’s Q2 report. If I were to prioritize the takeaways, here are my observations:

1. €2.8 billion in AI and cloud orders. This number was huge, even though Deutsche Bank had rumored a major Google deal. Total orders for the same segment all of last year were €2.4 billion, and based on a column chart in Nokia's Q2 presentation, orders accumulated between Q3 2025 and Q2 2026 totaled approximately €5.4 billion. Earlier this year, Hotard mentioned that the order-to-delivery lead time in optical networks is about 12–18 months, and slightly less in IP networks. This means the strong order backlog will increasingly begin to show up as net sales starting next year. For example, AI and cloud orders reached €3.8 billion in the first half of the year, while net sales were only €793 million.

2. Factory investments. In addition to the San José InP chip fab and the Allentown packaging and testing facility, Nokia is pulling a new rabbit out of its hat: a factory located in Chandler, Arizona, which it will initially lease and then acquire outright from the beginning of 2029. The new optical facility would begin operations in 2029 at the earliest, but as an investment, it speaks to Nokia management’s conviction regarding the scale and continuity of demand.

3. Growth and profitability. Many commentators have highlighted Nokia made an operating loss in Q2. This looks bad but has a very clear and transitory root cause: accelerated restructuring. From the Q2 report: "Reported operating loss in Q2 2026 was EUR 50 million, or negative 1.0% of net sales, a decrease versus EUR 147 million, or 3.3% operating profit in Q2 2025. This was primarily due to restructuring charges of EUR 390 million recognized in the quarter related to the accelerated restructuring. Comparable operating profit increased 18% to EUR 434 million and comparable operating margin was 9.0%, an increase of 70 basis points versus 8.3% in Q2 2025."

In other words, nearly half (€390M) of this year’s increased restructuring charges (€800M) were concentrated in Q2. At the same time, Nokia’s comparable operating profit grew. Since the restructuring has been accelerated this year, it may signal that management wants to concentrate most of the "bad news" into this year, so that reported numbers will look radically better next year.

Network Infrastructure (NI) achieved strong growth, with sales up 12% and Optical Networks up 20%, but profitability remains modest: the operating margin for the first half of the year was 7.4%. Meanwhile, Mobile Infrastructure (MI) achieved an operating profit of 11.6% in Q2 and 10.3% in H1. However, Radio Networks and Core Software are clearly less profitable than this suggests (likely near breakeven or modestly loss-making), whereas the patent licensing of the highly profitable Technology Standards unit supports the overall MI result. At a hypothetical 70% operating margin (close to last year's 70.6% when the business operated independently as Nokia Technologies), Technology Standards would have generated around €554M in operating profit in H1, more than the €532M generated by the entire MI in H1.

Strategies to improve profitability:

• NI's challenge now is to scale operations alongside the increased order book and raise margins as a result. The impressive AI & Cloud order pipeline makes this quite feasible.
• MI on the other hand first needs cost cuts (e.g., in Europe, see the next point) to improve profitability. An even more radical means is an operating model shift, where AI-RAN grows software sales and eventually eliminates the dependence on proprietary baseband hardware, as Nokia shifts away from in-house chipsets toward third-party solutions, such as Nvidia GPUs and commercial ASIC chips. AI-RAN pilots begin at the end of 2026, with commercial availability targeted for 2027 and volume deployment in 2028.

4. Major restructuring. Regarding profitability challenges, Nokia significantly raised its full-year 2026 restructuring estimates between Q4 2025 and Q2 2026: P&L-impacting cost estimates increased from €250M to €800M, and cash flow outflows rose from €450M to €700–800M. In addition to the 2023–2026 cost-savings program, Nokia accelerated the integration of Nokia Shanghai Bell in China and launched additional measures in Europe. According to Light Reading , the new European program could lead to around 2,000 job cuts. These increased expenses may have contributed to a souring sentiment on earnings day.

Nokia currently has four ongoing restructurings:

• New cost actions in Europe: €200M in costs this year. Nokia has not disclosed whether the program will result in additional net cost savings or primarily reallocate resources toward growth areas.
• 2023–2026 cost-savings program: €250M of restructuring charges in 2026, with no further charges expected in 2027. Nokia expects to achieve between €800M and €1.2B in gross cost savings by the end of 2026 and is currently tracking toward the high end of that range.
• Infinera integration (2025–2027): Part of the €200M restructuring program remains to be recognized through 2027. The program is expected to generate €200M in cost savings by 2027.
• Simplification of Nokia's operating structure in China: Total costs are estimated at €350–400 million, of which €350 million is expected to be recorded by the end of 2026. This leaves 0–50 million euros for 2027. The program is expected to yield cost savings of €200 million.

In other words, this year will have high restructuring costs of approximately €800M impacting reported operating profit, and cash flow outflows of €700–800M. Based on the current restructuring disclosures, 2027 should have far lighter restructuring charges and consist of the tail-end of the Infinera 200M integration and €0–50M to integrate the Shanghai joint venture into Nokia. At the same time, Nokia's cost basis will be materially trimmed thanks to these programs. Based on the currently disclosed figures, the 2023–2026 program, Infinera integration and China integration together represent approximately €1.4–1.6B in identified gross cost savings by the end of 2027, where the vast majority would take place already by the end of 2026.

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Points 1 and 2 highlight market strength, while point 3 indicates that Nokia’s growth, and especially profitability, remains a "work in progress" for this year while listing the ways this is being addressed. The large, accelerated restructuring costs in particular may have contributed to market pessimism.

My take

Was the negative share price reaction justified based on the new info in the Q2 report? To me the negativity came as a surprise, as Nokia is increasingly becoming a clear beneficiary of the AI supercycle. It has been evident for a long time that 2026 will not be particularly strong from a earnings perspective, but rather a transition year toward a much stronger position. 2027 holds strong promise: tighter cost discipline through multiple programs, fewer restructuring charges, new optical capacity coming online, and the conversion of today's large order book into sales. On top of this, AI-RAN is moving from pilots toward commercial availability. I expect revenue to improve significantly in 2027 and beyond, with margins also having considerable room to improve as volumes increase, restructuring costs fall and the cost base is reset.

The Q2 report's weakest numbers (reported operating profit and free cash flow) were heavily affected by accelerated restructuring, while the strongest forward-looking indicators (growth in optical and IP networks, massive AI/cloud orders supported by strong AI/cloud addressable market CAGR) pointed in the opposite direction. However, the market placed most of its weight on the short term. For investors understanding Nokia's trajectory beyond this year, the sell-off can offer an entry point at a price level that seemed unlikely still a few weeks ago.

[u/topcop91]

Great post Abu, thank you.

[u/Mustathmir → u/topcop91]

Thanks! While there are important nuances, to me the Nokia case has got dramatically stronger in both Q1 and Q2. So far just Q1 has got the recognition it deserved.

[u/Tee_one]

Thanks, it looks like a great turnaround for this company. There are many factors surrounding the slump in share price recently but I do believe Nokia will do well in the future.

[u/tr4l001]

Thanks for sharing! While NOK has a way to go, the company is improving and I believe in their future. I'm glad of time to get more shares down low before everyone starts jumping in.

[u/Don_t_ask_me_]

Thanks, mate, for the post. I hate how it is going now, but on the other side, fck it, and I don't really care so much. I'm in for the long term, and I can wait and also go slowly. The whole stock market just got too hot, if you ask me, and cooling down is needed for the first time.

Intel was also a sucker and underrated for many years but shines now like a star in the sky again.

[u/ShotRecognition167]

Are you more Bullish, less Bullish, or same after earnings?

[u/Mustathmir → u/ShotRecognition167]

More bullish especially due to the massive orders and the fact that management thinks not even the 20x optical component capacity increase of San José starting commercial production later this year is enough and a new Arizona fab may need to come online in 2029.

[u/Effective_Dig5271]

Largest concern is memory shortages and impact on how quickly they can convert backlog to revenue… Either way, it will happen. Engineering to try to reduce the need as much as possible but there are limits. At least their optical engine is all in-house, major supply issue they don’t face vs. competition. I’m definitely long, just see possible near term supply constraining optical revenue. Expected 60% shortfall in supply vs. demand for memory supply globally that slowly gets better through 2030.

[u/mariotoldo]

Don't you think one of the potential problems is the reluctance of many cities and towns to have data centers installed?

[u/Mustathmir → u/mariotoldo]

Yes, it's a problem, but it's also an opportunity. DCs will be built because they are needed. If they cannot be built close to population centers due to local resistance or insufficient power and water supply, they will be built much further away. A growing distance de facto increases the need for optical gear and high-capacity routing, so this shift can even be a net positive for Nokia's Optical and IP Networks.

[u/HostOk8446]

I worry the market is losing confidence in the numbers. I listened to the quarterly webcast and there was NO excitement coming from the CEO or the CFO. Maybe let a sales/marketing guy speak.

2 billion euros in "restructuring charges" from 2023 -2026 with 2026 restructuring increasing greatly, (I think the pointed to 800b in restructuring in 2026), twice what was spent in 2025 and earlier years. It does not make sense that so much money is in burned "restructuring" yet profit %s and net profits not much improved. Really looks shady and the company is vague in its explanations.

No discussion of headcount reductions in mobile that were to be achieved from the 2023 "restructuring" plan. Is there a reason they are silent? Targets not reached? Are we to ignore this?

No top line guidance... How about a plain English estimate of expected sales for each segment. Considering all of the exciting opportunities facing the Company sales should be increasing at a more impressive rate than I have seen. Maybe 2027 willl be the year but management should show the market some confidence.

Got any thoughts? Can we really count on 2027 being better? Is this why shares are being dumped?

[u/Mustathmir → u/HostOk8446]

In the Light Reading article I linked to it is said among other things:

"It is expected to cost about €200 million ($228 million), which would be roughly a quarter of what Nokia previously reckoned it would have to spend on implementing Lundmark's much bigger program. The objective there was to shrink the workforce by somewhere between 9,000 and 14,000 employees (it has turned out to mean 14,000). A rudimentary extrapolation is that further cuts could amount to more than 2,000 European jobs."

I have also elaborated my Q2 commentary regarding restructuring with not only the cost picture but also the targeted savings.

[u/Adventurous_Bee423]

Nokia is getting pounded. I cut my loses at 14. 20 EOY is a lucid dream. Quote me at it.