Stock Analysis & Valuation Nokia Oyj (NOKIA.PA)

• Previous Close: €5.55
• Sector Valuation Confidence Level: Low

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	26.82	383
Intrinsic value (DCF)	2.78	-50
Graham-Dodd Method	1.94	-65
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Nokia Oyj (NOKIA.PA) is a global leader in mobile, fixed, and cloud network solutions, headquartered in Espoo, Finland. Operating across four key segments—Mobile Networks, Network Infrastructure, Cloud and Network Services, and Nokia Technologies—the company provides cutting-edge telecommunications infrastructure, including 2G to 5G radio access networks, microwave transport, fiber and copper-based fixed networking, and cloud-based services. Nokia also offers IP routing, optical networking, submarine networks, and enterprise solutions, serving communications service providers, hyperscalers, and governments. With a rich history dating back to 1865, Nokia has evolved into a key player in the global telecom equipment market, leveraging its extensive patent portfolio and R&D capabilities. The company’s focus on 5G deployment, network virtualization, and cloud-native solutions positions it strategically in the rapidly evolving tech and communication equipment sector.

Investment Summary

Nokia presents a mixed investment case. On the positive side, its strong position in 5G infrastructure, diversified revenue streams, and solid intellectual property portfolio (Nokia Technologies) provide stability. The company’s improving profitability (€1.28B net income in FY 2023) and healthy operating cash flow (€2.49B) support its dividend (€0.13/share). However, Nokia faces intense competition from Huawei, Ericsson, and newer entrants, which could pressure margins. Its beta of 0.616 suggests lower volatility than the broader market, but growth depends on global 5G adoption rates and geopolitical factors, particularly in Europe and North America. Investors should weigh its steady cash generation against risks from supply chain disruptions and R&D expenditure requirements.

Competitive Analysis

Nokia competes in the highly concentrated telecom equipment market, where scale, R&D investment, and geopolitical positioning are critical. Its primary advantage lies in its end-to-end portfolio, spanning radio access, IP/Optical, and cloud networking, allowing it to serve CSPs and enterprises holistically. Nokia’s stronghold in Europe and North America (where Huawei faces restrictions) provides a stable revenue base, while its submarine and fixed networks diversify exposure. However, it lags behind Huawei in cost efficiency and Ericsson in 5G radio market share. Nokia Technologies’ IP licensing is a high-margin differentiator but depends on prolonged legal enforceability. The company’s Cloud and Network Services segment struggles against hyperscalers like AWS and Microsoft in cloud-native solutions. Long-term competitiveness hinges on maintaining R&D leadership in Open RAN and private 5G networks while managing debt (€4.75B) and capex demands.

Major Competitors

• Ericsson (ERIC.B): Ericsson is Nokia’s closest peer, with a stronger footprint in 5G radio networks (especially in the U.S. and Asia). It outperforms Nokia in gross margins but faces similar challenges from Huawei. Ericsson’s recent struggles with compliance issues in Iraq and a slowdown in North America have dented growth, giving Nokia an opportunity to regain share.
• Huawei (unlisted) (002502.SZ): Huawei dominates the global telecom equipment market by revenue, leveraging cost advantages and state support. Its exclusion from Western markets (U.S., U.K., Australia) benefits Nokia, but Huawei’s R&D scale and pricing power in Asia and Africa remain unmatched. Lacks transparency due to its private structure.
• Cisco Systems (CSCO): Cisco competes with Nokia in IP routing and enterprise networking but lacks a full 5G stack. Its strength in software-defined networking (SDN) and security poses a threat to Nokia’s cloud services. Cisco’s larger scale (market cap ~$200B) and cash reserves give it M&A flexibility.
• ZTE Corporation (ZTE): ZTE is a lower-cost alternative to Nokia in emerging markets, with strong 5G capabilities. It has recovered from U.S. sanctions but remains geopolitically constrained. ZTE’s smaller R&D budget limits its innovation edge against Nokia.
• Juniper Networks (JNPR): Juniper overlaps with Nokia in IP routing and optical networks but lacks wireless infrastructure exposure. Its focus on AI-driven networking (via Mist Systems) challenges Nokia’s automation efforts. Juniper’s smaller size limits its global reach compared to Nokia.