Nokia Shares Tumble Despite Hitting Fourth-Quarter Profit Targets — What’s Spooking Investors?

Nokia just delivered on its profit promise. So why are shareholders running for the exits?

The Numbers Game

Fourth-quarter targets? Met. The figures from the original report? Achieved. Yet the market's reaction was a swift, collective sell-off. It's a classic case of 'buy the rumor, sell the news,' where meeting expectations simply isn't enough anymore. The street wanted a beat, a surprise, a future so bright it needs shades—and got a tidy checkmark instead.

The Sentiment Sinkhole

This isn't just about one quarter's math. It's about narrative. In a tech landscape racing toward AI, quantum, and decentralized networks, a solid performance in legacy infrastructure can feel like yesterday's victory. Investors aren't just paying for current profits; they're front-running a vision. When that vision gets fuzzy, or worse, looks like a rerun, capital finds the door. It's the finance sector's favorite pastime: punishing adequacy.

Forward Guidance: The Real Target

Let's be real—the market is a forward-pricing machine. Hitting past targets is table stakes. The plunge signals a deeper fear: that Nokia's roadmap might lack the disruptive spark needed to command a premium in the coming years. In an era where software eats the world and blockchain rewires trust, hardware-centric resilience can be mistaken for stagnation. One cynical take? The big funds are already reallocating to assets with exponential narratives—wonder what those could be.

Nokia proved it can execute its plan. Now it needs to prove the plan matters for tomorrow.

New chairman brings financial experience

Baldauf first joined Nokia in 1994 and worked there until 2005, a period when the company dominated the global mobile phone industry. She came back to Nokia in 2018 and took on the chairman role in 2020, making her one of the company’s most experienced leaders.

Ihamuotila already sits on Nokia’s board as vice chairman. He previously worked as the company’s chief financial officer from 2009 through 2016. Currently, he holds a position at Swiss industrial group ABB, which he will leave by the end of 2026.

The company’s operating profit for the October-through-December period came in at 1.05 billion euros, or $1.26 billion, representing a 3% drop compared to the same quarter a year earlier. This figure matched the average prediction of 1.01 billion euros from analysts surveyed by LSEG. Sales for the quarter reached 6.12 billion euros, also meeting what market experts had forecast.

Looking ahead to 2026, Nokia said it expects operating profit to land somewhere between 2 billion and 2.5 billion euros. Analysts at Jefferies described this projection as “somewhat conservative” in their assessment of the results. The company also announced it WOULD maintain its dividend payment at up to 14 euro cents for each share, keeping it at the same level as the year before.

Nokia is currently going through one of its largest reorganization efforts since it sold off its once-famous mobile phone division more than ten years ago. The company is betting that growing demand for artificial intelligence technology and data centers will make up for reduced spending and lost contracts in the 5G wireless market.

With a 17% growth, the Optical Networks division performed the best. Demand for cloud computing and artificial intelligence drove this unit’s strong orders, which kept the book-to-bill ratio above one. Nokia intends to invest in this business sector to promote future outcomes since it sees it as crucial for growing AI infrastructure.

Last year, the company brought in Justin Hotard, a former Intel executive, as its new chief executive to accelerate this strategic shift. However, Nokia issued a profit warning related to import taxes in the United States and a declining dollar, which have squeezed profit margins and created pressure for additional cost reductions.

Transatlantic cooperation remains essential

During an interview with Reuters on Thursday, Hotard discussed the relationship between European and American markets. He emphasized that major technology firms cannot survive by operating in just one region.

“Every single one of us cannot subsist on one continent or the other. We need both,” Hotard said. “Particularly in technology, where the window and the right to win is dictated by that technology cycle, it’s really critical that you have as big a market access as possible. Every single one in Europe and the U.S. that is of scale is dependent on the European and U.S. markets for scale. If you just do the analysis, there’s a significant codependence,” he added.

Nokia and Sweden-based competitor Ericsson have both promoted themselves as trustworthy Western providers of network equipment while governments reconsider their relationships with Chinese manufacturers. The United States does not have a major domestic telecom equipment maker, forcing American carriers to depend on Nokia, Ericsson, and South Korea’s Samsung after Chinese companies were blocked due to national security worries.

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