Starting the lightning round of the September 16 episode of Mad Money, a caller asked for thoughts on Nokia Oyj (NYSE:NOK) as they highlighted the company’s partnerships with NVIDIA and Google, networking and data center buildouts, and AI defense systems. Jim Cramer replied:
I like Nokia very much. I’m glad you brought it to our attention. I think it’s a terrific situation, and I would be a buyer right here, right now.
AI and Cloud Growth is Driving Nokia’s Results
Nokia Oyj’s second-quarter results showed accelerating demand from AI and cloud customers. AI and cloud customer sales increased 105% year over year to €446 million, while Network Infrastructure revenue rose 12% on a constant-currency basis, led by 20% growth in Optical Networks and 16% in IP Networks. CEO Justin Hotard said AI and cloud order intake reached €2.8 billion in the quarter and that Nokia expects “around half of these orders to convert to revenue over the next twelve months.” The company’s 2026 comparable operating-profit outlook is €2.1 billion to €2.6 billion.
Nokia also said on September 16 that operators across North America, Europe, Asia-Pacific and the Middle East were advancing AI-RAN trials using NVIDIA’s Aerial RAN Computer. The company said its AI-RAN platform had produced more than 20% improvements in spectral efficiency, with further software-driven gains targeted for 2027 and 2028.
Bear Case is Still About Profitability and Cash Flow
Nokia Oyj’s reported financial results remain weaker than its comparable figures suggest. The company posted a €50 million operating loss in the second quarter, compared with a €147 million operating profit a year earlier, while its reported operating margin fell to negative 1% from 3.3%. The company attributed the decline to a faster pace of restructuring. Free cash flow was also negative €732 million in the quarter. It expects €800 million to €900 million of capital expenditures in 2026 and approximately €800 million of restructuring and associated charges, with restructuring-related cash outflows of €700 million to €800 million.
Nokia expects third-quarter comparable operating profit to be broadly in line with the second quarter, before increasing in the fourth quarter. The company’s 2026 free-cash-flow conversion assumption is 55% to 75%, with customer payment timing, regional demand and capital spending among the factors that could affect conversion.
Hedge Fund Positioning and Short Interest
Insider Monkey, which tracks more than 1,000 hedge funds, counted 81 hedge funds holding Nokia in the second quarter, up from 66 in the previous quarter. As for Nokia’s short interest, it was approximately 1.0% to 1.3% of the float. Cramer’s bullish view comes as Nokia Oyj’s AI and cloud business is producing faster growth and a larger order pipeline. But the company is still absorbing substantial restructuring and capital spending while generating negative quarterly free cash flow, leaving its financial results to show how much of the AI demand translates into sustained profit and cash generation.
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