Nokia Oyj (HLSE:NOKIA) Bets On 5G And AI As Valuation Debate Heats Up
Recent portfolio changes at Nokia Oyj (HLSE:NOKIA), including the divestiture of non-core assets and new commitments to 5G, AI and cloud, together with new partnerships with Google Cloud and Vodafone, are drawing investor attention to the stock.
These portfolio moves come alongside a sharp share price swing. Nokia Oyj’s 30-day share price return of 19.9% follows a 90-day period when the share price fell 27.46%. Yet the year-to-date share price return of 64.01% and 1-year total shareholder return of 151.37% point to building momentum rather than fading interest.
Compare Nokia Oyj's momentum with other connectivity and infrastructure stocks by scanning our hand picked 38 power grid technology and infrastructure stocks that could be shaping the next leg of this theme.
Nokia Oyj is reshaping its portfolio around 5G, AI and cloud just as the share price has surged over the past year. The key issue now is whether that story is already fully reflected in today’s valuation.
Most Popular Narrative: 40.2% Undervalued
The most followed narrative for Nokia Oyj puts fair value at €15.16 per share compared with the last close at €9.06. That gap is built on a focused view of earnings power, cash generation and Nokia Oyj’s push into AI, cloud and defense related connectivity.
Nokia delivered a strong second quarter, reporting revenue of €4.815 billion and earnings per share of €0.07, supported by growing demand for AI and cloud-related solutions. The company is also expanding its presence in the defense sector through AI-powered tools for 5G networks, creating additional opportunities to diversify revenue and strengthen long-term growth prospects.
The fair value in this narrative rests on more than a simple rerating story. It leans heavily on compounding earnings, expanding AI and cloud demand, and higher margin potential from licensing and defense exposure. Curious which assumptions really do the heavy lifting in that €15.16 figure?
Result: Fair Value of €15.16 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Nokia Oyj still faces risks if AI and defense demand slows, or if profit margins do not track the earnings and cash flow assumptions behind this narrative.
Find out about the key risks to this Nokia Oyj narrative.
Another View On Nokia Oyj’s Valuation
The first narrative argues Nokia Oyj is around 40.2% undervalued at €9.06 based on earnings power and growth. A second lens looks at the current P/E of 72.3x against a peer average of 44.7x and a fair ratio of 55.4x, which suggests the stock could already be pricing in a lot of good news. How comfortable are you if sentiment cools and the market moves closer to that fair ratio?
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
With sentiment on Nokia Oyj split between opportunity and caution, it makes sense to move quickly and test the numbers yourself so you can form an independent view using our breakdown of 2 key rewards and 3 important warning signs
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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