On September 17, B. Riley initiated coverage of Nokia Oyj (NYSE:NOK) with a Buy rating and a $15 price target. The firm highlighted Nokia’s position in telecom infrastructure, cloud software and hardware networking solutions.
B. Riley said Nokia’s networking businesses are posting strong growth. In the second quarter of 2026, Optical Networks revenue rose 20% year over year, while IP Networks grew 16%. Net sales to AI and cloud customers also jumped 105%. The firm noted that hyperscalers continue to buy Nokia Oyj’s AI networking products to support large-scale computing clusters.
The company’s AI and cloud opportunity is also visible in its order book. Nokia Oyj reported EUR 2.8 billion in AI and cloud order intake in the second quarter of 2026. According to B. Riley, that gives the company some revenue visibility into 2027. The firm also said the carrier inventory correction cycle that had weighed on global capital spending has now ended.
B. Riley derived its $15 target using a sum-of-the-parts valuation that separates Nokia’s legacy assets from its data center business. It applied a premium hardware multiple to the data center segment, reflecting its view that the business has significant operating leverage potential.
Profitability remains a concern
At the same time, Nokia Oyj’s financial results remain mixed. In the second quarter of 2026, the company posted a EUR 50 million operating loss, compared with a EUR 147 million operating profit a year earlier. Its reported operating margin also fell to negative 1% from 3.3%.
Nokia Oyj attributed the deterioration to a faster pace of restructuring. Free cash flow was also negative EUR 732 million in the second quarter. The company said it had accelerated certain restructuring actions and now expects total related charges of EUR 800 million in 2026.
Those costs are creating a near-term financial burden even as demand from AI and cloud customers remains strong.
What market data show
Hedge fund interest in the stock also increased in the second quarter. According to Insider Monkey, 81 hedge funds held Nokia Oyj at the end of the quarter, up from 66 at the end of the first quarter.
Short interest remained relatively low. As of August 31, it stood at 1.04% of the company’s shares outstanding, indicating limited bearish positioning.
Analyst sentiment is broadly positive as well. Of the 31 analysts covering Nokia Oyj, 61% rate the shares Buy. The median 12-month price target is $13.33, implying 24.84% upside from the stock’s price as of September 18.
Overall, the investment case for Nokia Oyj now hinges on whether its AI and cloud business can translate into stronger financial performance. While EUR 2.8 billion in order intake and a 105% rise in sales to AI and cloud customers point to a meaningful growth opportunity, the operating loss and negative free cash flow show that the benefits have not yet fully reached the bottom line.
