Nokia Sells Off Despite AI-Driven Profit Beat as Valuation Concerns Surface

What happened

Nokia reported a quarterly profit beat powered by strong demand from AI data centers, yet its stock tumbled 10% to around $8, dragging peer Ericsson lower. The selloff indicates that the market had already priced in exceptional growth, and the beat was insufficient to sustain the stretched valuation. The latest DeepValue report had flagged a WAIT rating with an attractive entry of $11, citing rich multiples and the need for durable AI & Cloud order intake. The sharp drop now brings the stock below that entry level, but it also reflects skepticism about whether hyperscaler spending will continue at the same pace. The reaction underscores that the investment thesis hinges on order durability rather than a single strong quarter.

Implication

The profit beat confirms fundamental strength in Nokia's AI & Cloud segment, but the market's negative reaction shows that expectations were extremely high and valuation was the primary constraint. With the stock now at $8, below the previously identified $11 attractive entry, the risk-reward has improved, but the selloff also signals that the market is repricing the sustainability of AI-driven orders. According to the master report, the key checkpoints are Q2-Q3 2026 order intake and IP networking acceleration, and a failure to maintain order momentum could lead to further downside. Investors should wait for evidence that hyperscaler capex remains supportive and that Nokia's San Jose capacity ramp stays on track before considering a more constructive stance. Until then, a WAIT rating with a focus on order durability remains appropriate, with potential entry points if the stock stabilizes near current levels.

Thesis delta

The thesis shifts from cautiously neutral to opportunistically watchful following the sharp post-earnings selloff. The decline to $8 brings the stock below the previously established $11 attractive entry, improving the margin of safety, but it also reflects market doubts about the persistence of AI-driven order momentum. Confirmation of sustained order intake in the next one to two quarters is now even more critical before any rating upgrade.