Can Nokia Stock Sustain Its Move Toward Redemption?Nokia Oyj Sponsored ADRBATS:NOKKalaGhaziEvery so often, a stock that I had long since relegated to the dusty corners of market history manages to deliver an unexpected jolt. Nokia’s (NOK) bullish price movement on Monday did exactly that, catching my attention and prompting a closer look at a company I had not seriously considered in years. I cannot recall the last time I wrote about the Finnish telecommunications equipment giant. It has likely been more than five years. Nokia’s shares have not traded above $10 since March 2011, a stark reminder of how far the company has fallen from its former glory. In the years since, the stock has experienced a wide range of volatility, dipping as low as $1.63 in July 2012 and reaching a high of $9.79 in January 2021. Yet it has never come close to revisiting its November 2007 peak of $42.22, a 20-year high that now seems like a distant memory from a different era. When I saw that Nokia’s shares had gained nearly 5% in a single session, with trading volume exceeding 71 million shares, I felt compelled to investigate what was driving renewed interest in this long-forgotten stock. AI Takes Center Stage Not surprisingly, artificial intelligence appears to be a significant factor behind the company’s 18-month resurgence. However, I have heard the argument that “this time it’s different” on numerous occasions over the past decade, and skepticism remains warranted. Nokia’s most enduring claim to fame—or infamy—remains its dramatic failure to maintain its dominant position in the mobile phone market. In the early 2000s, the company held roughly 50% of the global mobile phone market and stood as Europe’s most valuable corporation. That spectacular rise was followed by an equally spectacular fall from grace, a cautionary tale that continues to shadow the company’s narrative. Now that Nokia has returned to my radar, I find myself weighing whether its recent climb to $8.82 represents a genuine move toward double-digit territory and beyond, or whether it is merely a colossal head fake that will give way to a retreat as 2026 unfolds. Either way, the company’s bullish price surprise has certainly succeeded in capturing my attention. A Stretched Valuation When evaluating a stock that has experienced a significant run, I find it useful to examine its valuation metrics at the height of its historical success. For Nokia, that benchmark is 2007. That year, according to S&P Global Market Intelligence, the company generated €51.06 billion ($58.80 billion) in revenue and €9.0 billion ($10.36 billion) in operating income. By 2025, revenue had fallen to €19.89 billion ($22.9 billion), with operating income of €1.54 billion ($1.77 billion). The operating margin in 2007 stood at 17.6%, more than double today’s margin. At the end of 2007, Nokia’s enterprise value was 2.03 times sales. Today, that multiple stands at 2.01 times. For context, the S&P 500’s price-to-sales ratio at the end of 2007 was 1.43; today, it is 3.30. One could argue that, based on the broader index’s multiple expansion over the past 18 years, Nokia’s price-to-sales multiple should arguably be higher today. However, such an argument neglects two important considerations. First, the broader index’s current valuation is widely considered stretched beyond historical norms. Second, and more critically, Nokia today is not nearly as robust a business as it was in 2007. Free cash flow is a metric I frequently emphasize because it provides valuable insight into a company’s financial strength and operational efficiency. At the end of 2007, Nokia generated €7.17 billion ($8.26 billion) in free cash flow. Based on $58.80 billion in revenue, its free cash flow margin was 14.0%. Today, with free cash flow of €1.47 billion ($1.69 billion) on $22.9 billion in revenue, the margin stands at 7.4%, roughly half of what it was at its peak. At the end of 2007, Nokia’s enterprise value was €95.5 billion ($109.98 billion), giving it a free cash flow yield of 7.5%. In my experience, anything at 8% or above suggests undervaluation. Today, based on an enterprise value of €40.02 billion ($46.09 billion), Nokia’s free cash flow yield is 3.7%. Anything below 4% tends to indicate overvaluation. One could argue that these free cash flow yields suggest Nokia was fairly valued both then and now. Alternatively, one could conclude that today’s valuation incorporates a considerable amount of conjecture and future expectations, whereas in 2007, Nokia was still a telecom powerhouse at the top of its game. One business arguably deserved a stretched valuation; the other, perhaps not as much. What’s All This About AI? In mid-January, Morgan Stanley analyst Terence Tui upgraded Nokia’s stock from Equal Weight to Overweight, simultaneously raising the target price to €6.50 ($7.49) from €4.20 ($4.84). On March 13, the analyst increased the target once more to €8.50 ($9.79). More notably, Nokia has been included on the investment bank’s Top Picks list for 2026. Tui believes that the restructuring efforts undertaken in recent years have positioned the company for future growth. That growth trajectory accelerated following Nokia’s $2.3 billion acquisition of Infinera in February 2025. In its June 2024 statement announcing the acquisition, Nokia explained that the combination would increase the scale of its Optical Networks business by 75%, allowing it to accelerate its product roadmap timeline and breadth. The company stated that this would provide better products for customers and create a business capable of sustainably challenging the competition. With Infinera now part of its portfolio, Nokia is actively pursuing opportunities in AI, data centers, and cloud computing. In recent months, it has secured AI-focused partnerships with Telefonica (TELFY), TIM Brazil, and Deutsche Telekom (DTEGY). As a result, its AI and cloud business—which currently accounts for approximately 6% of revenue—is expected to grow considerably in the years ahead. It certainly does not hurt that Nvidia (NVDA) owns nearly 3% of Nokia’s stock, adding a layer of strategic validation. While Nokia remains a long way from the double-digit returns on assets and capital that it routinely generated before 2009, if it can simply double its current returns—which stand at 2.5% for ROA and 3.8% for ROC—the current valuation would appear considerably less stretched. The Bottom Line on Nokia Stock I am encouraged to see Nokia on a path toward recovery. The company was one of Finland’s great success stories in the early part of the 21st century, and it has the potential to reclaim some of that former stature with even modest traction from its optical networking business’s push into AI and data centers. Analysts, however, remain relatively lukewarm on the stock. Of the 18 analysts covering Nokia, 10 rate it a Buy, giving it a consensus score of 3.67 out of 5. The average target price stands at $7.69, which is below the current share price, suggesting that expectations for near-term upside remain tempered. For aggressive investors willing to accept higher risk, a modest position in Nokia at current prices may not be a lost cause. That said, the stock offers decent options volume, providing an opportunity for those looking to use options strategies to reduce risk while maintaining exposure to a potential turnaround story.