Nokia’s €100 Million Defense Bet Highlights New Revenue Streams as Shares Sit 30% Below Their Peak

Nokia’s push into military communications is picking up speed. The Finnish network equipment maker on Thursday announced an operational partnership between its Nokia Defense unit and NestAI, a European AI laboratory focused on battlefield technology. The deal, which builds on a €100 million joint investment by Nokia and the Finnish state fund Tesi last November, sent shares up 2.93% to €10.71. Yet even with that bounce, the stock remains 28% below the 52-week high of €14.97 set on June 3 — a reminder that the broader selling pressure has not let up.

The heart of the collaboration is secure communication in “denied environments,” where conventional networks are jammed or disrupted. Three capabilities are slated for integration: a native AI command system that fuses Nokia’s mobile 5G gear with NestOS, a battlefield operating system; real-time mission planning that adjusts radio links during operations; and enhanced threat detection using Nokia’s ISAC technology combined with NestAI’s multi-sensor tracking. The goal is to modernise European military infrastructure at a time when defence spending across the continent is hitting record levels.

The timing could hardly be better for Nokia. By positioning itself as a provider of “AI-native” networks, the company is tapping revenue streams that are less dependent on the cyclical telecom carrier build-out that has weighed on its traditional business. Amortisation of the NestAI investment has already been booked, and the partnership gives Nokia a direct line into a fast-growing defence market where margins tend to be higher than in standard mobile infrastructure.

That strategic shift is being watched closely by analysts, even as the stock has suffered a significant correction. Over the past 30 days, Nokia shares have lost 13.33%, and the seven-day decline stands at 1.61%. The 50-day moving average of €12.08 sits nearly 14% above the current price, while the 14-day relative strength index has fallen to 38.4, approaching oversold territory. Annualised 30-day volatility is running at 73.13%, underscoring the sharp swings that have characterised the past few weeks.

Should investors sell immediately? Or is it worth buying Nokia?

Yet the analyst community has not turned negative. Danske Bank upgraded Nokia from Hold to Buy on July 1, setting a price target of €14.00, and another house soon followed with a €15.60 target, citing the company’s improving position in AI and cloud infrastructure. Both maintained their buy recommendations even as the stock continued to slide. That disconnect between falling prices and rising analyst optimism is a central theme of the current narrative — Nokia is not trading like a company in distress, but it is behaving like one in the near term.

The underlying fundamentals offer a mixed picture. Nokia generated roughly $19.22 billion in revenue, putting the price-to-sales ratio at a modest 1.56. The price-to-earnings multiple of 46.1, however, looks stretched for a business growing at a moderate pace. On the balance sheet side, total assets of about $37.6 billion support equity of $21.0 billion, providing ample cushion to weather weaker demand for telecom equipment — the very factor that has depressed the stock in recent weeks. U.S.-listed Nokia ADRs were among the weakest European names on days when the broader market rallied, suggesting that sector-specific headwinds, not macro fear, are driving the selloff.

Beyond defence, Nokia is deepening its bet on AI and cloud services more broadly. The company is expanding its partnership with Google Cloud, embedding Gemini-based AI agents into its Assurance Center, with a SaaS launch via the Google Cloud Marketplace planned for September. Separately, its collaboration with Amazon Web Services will bring the Autonomous Networks Fabric to AWS later this year, targeting Level 4 autonomous network capabilities. These initiatives, together with the previously announced multibillion-euro cooperation with Nvidia, form the core of a longer-term growth thesis that analysts find compelling.

Technically, the long-term trend remains intact despite the recent pullback. The stock trades 38.63% above its 200-day moving average, and on a 12-month basis it is still up 144.52% — a gain that includes substantial year-to-date appreciation of 92.35%. The correction from the June peak has shaken out short-term momentum traders, but the structural bullish case built around AI-RAN, optical networking, and cloud partnerships has not been invalidated. Investors will get their next cue on July 23, when Nokia reports its second-quarter earnings and, more importantly, offers more colour on how the defence and AI verticals are influencing the order book and margins.