Jim Cramer Recommends Buying Nokia Stock
Jim Cramer said he would buy Nokia stock, citing its AI and cloud partnerships. The company reported strong AI-driven sales growth but posted an operating loss and negative cash flow.
Jim Cramer told viewers of his Mad Money show on September 16 that he would buy shares of Nokia immediately. He called the telecom equipment maker a "terrific situation" after a caller highlighted its partnerships with NVIDIA and Google, networking buildouts, and AI defense systems.
Nokia's second-quarter results show accelerating demand from artificial intelligence and cloud customers. Sales to these clients surged 105% year-over-year to €446 million. Network Infrastructure revenue grew 12%, led by Optical Networks and IP Networks.
CEO Justin Hotard said AI and cloud order intake reached €2.8 billion in the quarter. The company expects about half of those orders to convert to revenue within the next year. Nokia's outlook for 2026 comparable operating profit is between €2.1 billion and €2.6 billion.
AI Partnerships and Network Trials
On September 16, Nokia also announced that operators in North America, Europe, Asia-Pacific, and the Middle East are advancing trials of AI-RAN technology. The trials use NVIDIA's Aerial RAN Computer. Nokia claims its AI-RAN platform has delivered over 20% improvements in spectral efficiency. The company is targeting further software-driven gains for 2027 and 2028.
Financial Performance and Restructuring Costs
Despite the growth narrative, Nokia's reported financials present a weaker picture. The company posted a €50 million operating loss for the second quarter, a sharp reversal from a €147 million profit a year earlier. Its reported operating margin turned negative.
The company attributed the decline to an accelerated pace of restructuring. Free cash flow was deeply negative at €732 million for the quarter.
| Metric | 2026 Outlook |
|---|---|
| Comparable Operating Profit | €2.1 billion - €2.6 billion |
| Capital Expenditures | €800 million - €900 million |
| Restructuring & Associated Charges | Approximately €800 million |
| Restructuring Cash Outflows | €700 million - €800 million |
| Free-Cash-Flow Conversion | 55% - 75% |
Nokia expects its third-quarter comparable operating profit to be broadly in line with the second quarter before increasing in the fourth quarter. The free-cash-flow conversion target for 2026 is between 55% and 75%. The company noted that customer payment timing, regional demand, and capital spending could affect this conversion.
Hedge Fund Interest and Market Sentiment
According to data from Insider Monkey, hedge fund ownership of Nokia increased in the second quarter. The tracker, which follows over 1,000 funds, counted 81 hedge funds holding the stock, up from 66 in the prior quarter. Short interest in Nokia was reported to be between 1.0% and 1.3% of the float.
Cramer's bullish call arrives as Nokia's AI business shows rapid growth and builds a large order pipeline. However, the company continues to handle significant restructuring costs and capital investments while generating negative quarterly free cash flow. The coming quarters will reveal how much of the AI demand translates into sustained profitability and cash generation for the Finnish network giant.
