NOK Rally Fizzles? Stock Drops Premarket After 27% AI-Fueled Earnings Surge

• Nokia’s U.S. shares dropped 2% Thursday’s premarket trading.
• Stock has attracted a string of price targets and rating upgrades since Nokia’s earnings report last week.
• Nokia is transforming from “grandfather's Western Electric into the SpaceX of networking,” a Stocktwits user said.

U.S.-listed shares of Nokia Oyj fell more than 2% in early premarket trading on Thursday, pausing a sharp rally driven by growth in its AI networking portfolio as some investors took profits.

NOK stock has surged 27% over the past six sessions since the Finnish company’s April 23 earnings report, which impressed investors with progress in shipping hardware for the lucrative data center market.

Nokia Results Recap

Nokia reported first-quarter comparable sales in line with expectations and comparable profit ahead of expectations. More importantly, the company said its AI-augmented networking offerings are seeing healthy demand and raised the revenue growth target for its network infrastructure segment to 12% to 14% this year, up from the previous forecast of 6% to 8%.

"As a result, we are currently tracking somewhat above the ⁠mid-point of ​our full year financial outlook of 2.0 billion to ​2.5 billion euros in comparable operating profit," CEO Justin Hotard said at the time.

A series of moves last year had set Nokia on a growth path. The company appointed Justin Hotard – a senior executive with experience at Intel and Hewlett Packard Enterprise – as President and CEO, and acquired Infinera, which significantly strengthened its optical networking portfolio.

Analyst, Retail View On NOK

A string of analysts has raised their view on the stock since. Barclays, Morgan Stanley, and JPMorgan, among others, have raised their price target on the stock in the past week, while Argus and Arete upgraded the stock to ‘Buy’ from ‘Hold.’ 

Currently, 11 of 23 analysts rate the stock ‘Buy’ or higher, six rate it ‘Hold,’ and six rate it ‘Sell’ or lower, per Koyfin data. Their average price target of $9.92 is below the stock’s last closing price of $12.46.

On Stocktwits, the retail sentiment for NOK has held up in the ‘extremely bullish’ zone since last Thursday. Many traders believe Nokia’s rally is just getting started.

“$NOK A company the size of Nokia involved in the AI, Data Center, Photonics sector and almost nobody knew about it. We're still at the bottom,” said a trader.

Another wrote: “$NOK This could still be a ten-bagger from here. Nokia has the telecom equipment base, but the AI management team to fundamentally transform Nokia from my grandfather's Western Electric into the SpaceX of networking.”

As of the last close, Nokia shares are up 94% year to date.

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