HELSINKI — Nokia Oyj shares tumbled more than 6% on the Helsinki exchange Thursday, closing at 13.90 euros, down 0.91 euros or 6.15%, as investors appeared to take profits after the Finnish telecom equipment maker’s stock enjoyed a dramatic run-up fueled by artificial intelligence optimism.

The decline came amid elevated trading volume, with more than 20 million shares changing hands, well above recent averages. The drop reversed some of the strong gains seen earlier in the week, when the stock had climbed on positive sentiment around the company’s expanding role in AI networking infrastructure.

Nokia, a leader in mobile networks and optical systems, has repositioned itself amid the global push for advanced connectivity and data center buildouts. The company reported solid first-quarter 2026 results in April, beating expectations and raising its growth outlook for network infrastructure, particularly in IP and optical segments tied to AI demand.

Analysts have highlighted Nokia’s progress in AI-related offerings, including innovations in fixed networks and partnerships that position it to benefit from hyperscaler spending. Recent price target increases, such as Northland raising its target to $20 from $13 on the U.S. ADR, underscored growing confidence in the company’s trajectory.

Despite the day’s setback, Nokia’s shares remain up substantially year-to-date, reflecting a broader recovery narrative. The company has benefited from renewed focus on its technology portfolio following the integration of acquisitions like Infinera, which bolstered its optical networks capabilities critical for high-speed data transmission in AI environments.

Market observers noted the pullback as typical after rapid advances. The stock had hit multi-year highs in recent sessions, with gains driven by sector enthusiasm for AI infrastructure plays. Broader European markets showed mixed performance, but telecom and tech names experienced some rotation as investors reassessed valuations.

Nokia’s comparable operating profit guidance for the full year stands at 2.0 billion to 2.5 billion euros, with management tracking toward the midpoint. The company expects network infrastructure sales growth of 12-14% for 2026, incorporating strong contributions from optical and IP networks.

Q2 seasonality assumptions point to a 5-9% sequential increase in net sales, with operating profit for the quarter representing 12-16% of the full-year total. These figures reflect ongoing recovery in telecom capex cycles alongside new opportunities in AI-driven networking.

The company’s strategic shift emphasizes programmable networks, AI-powered automation and energy-efficient solutions. Nokia has launched initiatives such as an AI Networking Innovation Lab and new agentic AI capabilities for fixed networks, aiming to capture a larger share of enterprise and carrier spending on next-generation infrastructure.

Challenges persist in traditional mobile networks, where 5G deployment cycles have matured in many markets, leading to softer demand in some regions. However, leadership in optical transport and routing positions Nokia well for the surge in data center interconnect needs driven by generative AI workloads.

Investors continue to monitor upcoming catalysts, including the Q2 and half-year 2026 results scheduled for July 23. Management has emphasized execution on cost discipline, free cash flow conversion of 55-75% and capital expenditures in the 900 million to 1 billion euro range for the year.

On the corporate side, recent insider transactions have drawn attention, with senior managers disclosing purchases, signaling confidence in the company’s direction. Such activity often bolsters retail investor sentiment in a stock that has seen significant volatility over the past decade.

Broader industry dynamics support a constructive outlook for well-positioned players like Nokia. Global telecom operators and cloud providers are ramping up investments in AI-ready infrastructure, creating tailwinds for equipment suppliers. Analysts project continued growth in relevant segments even as traditional wireless markets stabilize.

Nokia’s U.S.-listed American Depositary Receipts (ADRs) reflected similar pressure in recent sessions but have shown resilience amid the overall uptrend. The company’s market capitalization stands in the tens of billions of euros, with a diversified global footprint across Europe, North America and Asia.

Looking forward, Nokia faces competition from rivals including Ericsson, Huawei and emerging players in optical and routing markets. Success will depend on winning large-scale deployments, maintaining technology leadership and navigating macroeconomic factors such as currency fluctuations and trade policies.

The stock’s recent performance highlights both the opportunities and risks in the AI infrastructure theme. While enthusiasm has driven sharp rallies, profit-taking and valuation concerns can trigger swift reversals, as seen on June 4. Long-term investors focus on fundamentals, including margin expansion and cash generation potential.

Nokia maintains a strong balance sheet and commitment to shareholder returns through dividends. The company continues to invest in research and development to stay at the forefront of 6G research and AI integration in networks.

As the market digests the day’s move, attention turns to any incremental news from industry conferences or analyst commentary. Nokia’s transformation from a legacy mobile phone giant to a key enabler of modern digital infrastructure remains a core investment thesis for many.

The June 4 decline, while notable, fits within the context of a volatile but upward-trending stock in 2026. With Q2 earnings approaching and ongoing AI tailwinds, the coming weeks could provide further clarity on whether the rally has further room or if consolidation is in store.

Market participants will also watch macroeconomic indicators affecting telecom spending, including interest rates and corporate IT budgets. Nokia’s diversified portfolio across network infrastructure, mobile networks and licensing provides some buffer against sector-specific slowdowns.

In summary, Thursday’s 6.15% drop in Nokia shares represents a healthy correction after outsized gains rather than a fundamental shift. The company’s strategic positioning in high-growth AI networking areas continues to underpin analyst optimism, even as near-term trading reflects profit realization.

The government is examining whether to relax the five-year timeline for foreign investors, required under the usual treaty template, to first exhaust Indian legal remedies before pursuing global arbitration for dispute settlement, they said. Under its 2024 investment pact with the UAE, India shortened this requirement to three years, signalling a special bilateral relationship.

The government is also weighing the pros and cons of granting the so-called most-favoured nation (MFN)-forward benefit, which means any concession offered by India to an investment partner under a bilateral treaty will automatically be extended to an existing partner, the officials said.However, safeguards will be built into any of these concessions to prevent potential abuse of treaty terms, they said.

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Two important principles

Foreign investors have long demanded relaxed terms under the Investor–State Dispute Settlement (ISDS) mechanism and MFN-forward concessions under investment treaties.
But any concession under BITs, according to the officials, will be guided by two principles: India won’t cede its future sovereign policy-making space, and it won’t allow the so-called “treaty-shopping” — essentially a strategy to dodge taxes.
A decision on these issues will be made after broader consultations, the officials said.

While the template will serve as a basis for negotiations, there will be no one-size-fits-all framework, and the final BITs will vary across countries depending on strategic, economic and other considerations, the officials stressed.

“The government is well aware of the sensitivities around such provisions. That’s why safeguards have to be built into any such relaxations, if they are finally approved,” said one of the officials. “But this is also the time to take the bull by the horns, because we need sustained foreign investments—a whole lot of them. The finance ministry is working on such issues.”

India is already planning to scrap the capital gains tax on investments in government securities by foreign portfolio investors.

It is pursuing BITs with over two dozen nations and blocs, including the EU, Russia, Saudi Arabia, the US, Qatar and Oman.

From caution to cautious optimism

The government has been cautious in forging investment treaties with other countries after an old treaty template–which formed the basis of dozens of such agreements with various countries between 1996 and 2016–led to litigation in several cases.

This prompted the government to draw up a new model in 2016. But the view now is that the 2016 template needs to be revised, ET has learnt.

The setbacks in arbitration rulings against the government, especially in the Vodafone tax case, further stoked caution.

However, deepening fears of capital outflows, especially after the West Asia war, and growing risk of capital reallocation driven by the global surge in artificial intelligence and other strategic technology investments, have warranted a fresh review of certain key issues around the basic negotiating terms of such treaties.

From $85 billion in FY22, total foreign direct investment (FDI) fell over two years before rising again to top $80 billion in FY25. Gross FDI inflows touched a peak of $94.5 billion in FY26. Net inflows, however, have remained subdued in recent years.