Nokia tops Q3 profit forecasts, yet shares slump to six-month low

what happened

Nokia beat third-quarter profit expectations, yet its shares dropped more than 10% in early trading and hit their lowest level in six months, according to Stocktwits. Investors reacted to negative free cash flow, higher restructuring spending and a warning from CEO Justin Hotard that rising component costs are becoming a lasting feature of network building. Hotard told analysts that the AI-driven squeeze on chips, memory and circuit boards is more than a passing gap; customers are now asked for 12 to 18 months of visibility, versus about six months previously. He expects the traditional telecom market to stay flat, but pricing to rise.

CFO Marco Wirén echoed the 2027 margin pressure that Ericsson flagged. Free cash flow in the third quarter was about minus €99 million ($111 million), and net cash stood near $2.9 billion. Nokia will add $448 million to working capital and cut its 2026 cash conversion guidance to 35–55% from 55–75%. Restructuring charges this year are now seen near $1.2 billion.

why it matters

The key takeaway is cost inflation: if component prices keep climbing, margins in network equipment could come under pressure even if demand holds. Strong AI and cloud revenue, up 123% and now 12% of sales, along with the forecast for 25–30% combined growth in optical and IP networks in 2027, eases some of that concern. That mix explains why the stock reacted to the outlook more than to the quarterly beat.

market impact

NOK: rising component costs and weaker cash flow weigh on shares; AI networking demand supports the outlook

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