NEW YORK — Nokia Oyj shares dropped 6 percent today, marking the largest single-day decline for the stock in May. The sell-off follows growing investor concern over a prolonged slowdown in global 5G network deployments that directly impacts Nokia's core revenue streams from selling radio access network equipment.
Telecommunications operators have tightened capital expenditure budgets across key markets. Major carriers in the United States and Europe are now focusing on monetizing existing 5G infrastructure rather than expansion. This trend impacts radio access networks and fiber deployment, creating a challenging environment for equipment suppliers like Nokia and rival Ericsson AB.
Nokia's first-quarter earnings report, released in April, showed a 19 percent year-over-year decline in its Network Infrastructure segment sales. CEO Pekka Lundmark said during the earnings call that "market uncertainty remains high, particularly in North America." The company has been working to offset this by expanding its enterprise business, which includes private wireless networks and industrial automation solutions.
Despite diversification efforts, the enterprise segment's growth has not fully compensated for the contraction in carrier spending. Analysts from JPMorgan Chase & Co. recently lowered their price target for Nokia to $4.50 from $5.20, citing a lack of clear catalysts for a near-term recovery in the 5G market. They project Nokia's adjusted operating margin will remain under pressure through 2027, making a recovery difficult without a broader industry shift.
Investors are now looking for signs of stabilization in global telecom capital expenditure. A sustained increase in demand for fixed-wireless access or a stronger push into Open RAN architectures could provide new opportunities for Nokia. Resolution of ongoing supply chain issues could also support better margins.
