Shares of Nokia plunged 10.2% to $14.93 on Friday, erasing nearly two weeks of gains as investors who had ridden a furious AI-fueled rally rushed for the exits. The stock reversed sharply after reaching its highest level in nearly two decades , with a stronger-than-expected U.S. jobs report sending Treasury yields higher and pressuring tech shares broadly . The selloff exposes a fault line at the heart of Nokia's bull case: explosive growth in AI networking sitting alongside decaying legacy businesses.

  • The AI Story Is Real — But It's Still Small

AI and cloud revenue nearly doubled to €350 million from €180 million in Q1 , and Optical Networks revenue surged to €821 million from €525 million, reflecting robust demand from AI and cloud customers . Impressive as those numbers are, AI and cloud contributed around 8% of total revenue . That means more than 90% of Nokia's sales still depend on traditional telecom operators — and revenue from those customers fell to €3.27 billion from €3.42 billion . Shareholders betting on an AI transformation need the new engine to grow fast enough to compensate for the old one shrinking.

  • Fixed Networks Is the Weak Spot That Won't Go Away

Fixed Networks revenue declined to €383 million from €468 million, mainly due to lower sales of consumer premise fiber products — a 13% drop that management frames as a deliberate shift toward higher-margin products. Investors are increasingly questioning whether newer growth areas can fully offset shrinking legacy operations . If the decline keeps up, it chips away at top-line progress even as optical sales boom.

  • A 208% Rally Left No Room for Doubt

After a 208% surge over the past 12 months, Nokia shares have become more susceptible to profit-taking during risk-off sessions . Northland analyst Tim Savageaux raised his price target to $20 from $13 , but at Friday's close, the stock has already retraced sharply from Tuesday's $17.10 17-year high. The gap between euphoria and fundamentals just narrowed painfully.

  • New Debt Adds a Wrinkle

Nokia priced €500 million in senior unsecured notes at a 3.625% coupon to refinance outstanding €500 million of 3.125% notes due May 2028 . That means Nokia is paying more to borrow — not the signal momentum investors want on a down day.

Nokia's next big test arrives with its Q2 report on July 23 . Until then, the question is binary: is this a healthy breather in a structural growth story, or the market's verdict that Nokia's AI premium got ahead of itself?