Nokia Stock Crashes 14% on a Beat: AI Sales Jumped 123%

Nokia beat earnings — and the stock still fell about 14%

Nokia (NYSE: NOK) reported a clear third-quarter beat on Thursday, October 22, 2026 — net sales up 10% to €5.15 billion and comparable operating profit up 35% to €605 million — yet its shares plunged roughly 14% in U.S. trading to about $7.93, one of the stock's biggest one-day drops in a decade. Sales to AI and cloud customers surged 123% year over year. So why did investors sell a beat? The answer was cash: Nokia cut its free cash flow outlook, reported negative free cash flow for the quarter, and raised its expected restructuring bill to about €1.1 billion.

What happened

Nokia's Q3 2026 numbers beat expectations on the headline lines. Net sales rose 10% year over year to €5.15 billion (9% at constant currency), ahead of a company-compiled consensus near €5.05 billion. Comparable operating profit climbed 35% to €605 million, well above estimates around €453–€454 million, and the comparable operating margin widened to 11.7% from 9.5% a year earlier. Comparable earnings were €0.09 per share — about 10 cents — beating the 8-cent consensus.

The growth engine was unmistakable. Net sales to AI and cloud customers jumped 123% year over year, and order intake from those customers rose 118% to €1.5 billion in the quarter. Network Infrastructure sales grew 17% to €2.16 billion, with IP Networks up 43% and Optical Networks up 18% at constant currency, driven by AI data-center demand, particularly in the Americas. Mobile Infrastructure sales rose 5% to €2.9 billion. Reported net profit nearly doubled to €156 million from €80 million a year earlier.

Why it's blowing up

The sell-off was about the gap between two profit numbers and one cash number. Nokia's reported operating profit — the one that includes restructuring and integration costs — fell 22% to €196 million, with the reported margin shrinking to 3.8% from 5.4%. Free cash flow was negative €99 million in the quarter, and cash from operations dropped to €95 million from €597 million a year earlier.

Then came the guidance change investors focused on. Nokia cut its full-year free cash flow conversion forecast to 35%–55% of comparable operating profit, down from 55%–75%, citing an extra €400 million of working-capital investment and accelerated restructuring. Expected restructuring charges for 2026 rose to about €1.1 billion, up from a plan of roughly €800 million in July, with €800–€900 million of that to be paid in cash.

The stock's reaction snowballed through the day: down about 3% in pre-market trading, more than 12% lower by mid-afternoon on some platforms, and around 14.3% lower late in the U.S. session, on roughly twice normal volume. The fall broke below the $8.41 July low that had held for three months — notable for a stock that was still up about 48% year to date heading into the print.

Key facts

Revenue: €5.15 billion, up 10% year over year, beating consensus near €5.05 billion.
Comparable operating profit: €605 million, up 35%, margin 11.7% — well above the ~€454 million estimate.
AI and cloud: sales up 123% year over year; order intake up 118% to €1.5 billion.
Reported operating profit: €196 million, down 22%, after restructuring and integration costs.
Cash: free cash flow was negative €99 million; full-year FCF conversion guidance cut to 35%–55% from 55%–75%.
Outlook held: full-year comparable operating profit guidance stayed at €2.1–€2.6 billion, with Q4 sales expected to rise 20%–24% sequentially.
2027 signal: CEO Justin Hotard said the combined Optical and IP Networks businesses are expected to grow 25%–30% in 2027.

What's next

Nokia kept its full-year profit outlook unchanged, so management's story is that the AI networking boom is intact and the cash hit is temporary — money spent on restructuring, integrating acquisitions, and stocking up to serve 2027 growth. The fourth quarter is now the test: Nokia expects sales 20%–24% above Q3, and investors will be watching whether that seasonal surge finally turns the AI order book into positive free cash flow. Until it does, Thursday's move shows a market that is no longer willing to pay for AI growth on profit headlines alone — it wants the cash to arrive with it. This report describes what happened and why markets reacted; it is not a recommendation to buy, sell, or hold any security.

Sources

FAQ

Why did Nokia stock fall after beating earnings?

Investors focused on cash, not the headline beat. Nokia reported negative free cash flow of €99 million, cut its full-year free cash flow conversion guidance to 35%–55%, and raised expected 2026 restructuring charges to about €1.1 billion.

How fast is Nokia's AI and cloud business growing?

Sales to AI and cloud customers rose 123% year over year in Q3 2026, and order intake from those customers rose 118% to €1.5 billion, driving IP Networks up 43% and Optical Networks up 18%.

What were Nokia's Q3 2026 results?

Net sales rose 10% to €5.15 billion and comparable operating profit rose 35% to €605 million, both beating consensus, while reported operating profit fell 22% to €196 million after restructuring costs.

Did Nokia change its full-year outlook?

Nokia kept its 2026 comparable operating profit guidance at €2.1–€2.6 billion and expects Q4 sales to rise 20%–24% sequentially, but it lowered its free cash flow conversion forecast to 35%–55%.

Nokia Stock Crashes 14% on a Beat: AI Sales Jumped 123% — So Why Did Investors Sell?