Nokia (NOK +3.04%) shares should seemingly be up today. The Finnish telecom-technology company's fourth quarter revenue grew 3% year over year to $7.13 billion, topping analysts' estimates of $6.95 billion. And, per-share earnings of $0.21 beat estimates of $0.17. Guidance for the year now underway is also encouraging, with the company expecting top-line growth of between 6% and 8%.
As of 3:06 p.m. ET today, however, Nokia's stock is down 8%. What gives?
Blame something unrelated to Nokia's results, mostly. That's Thursday's sweeping sell-off of most of the market's major AI stocks, started and led by Microsoft (MSFT 0.75%). The underlying worry has implications for one of Nokia's newest endeavors.
Legitimate concern
Simply put, while Microsoft's overall fiscal Q2 numbers were good, the massive amount of money the software giant's spending on AI of late isn't yet producing the returns investors had been anticipating. Investors quickly applied this same worry to other companies spending heavily on artificial intelligence with no certainty that an adequate payback awaits.
Image source: Getty Images.
Nokia is now one of those other companies. Although the bulk of its business is still traditional telecom equipment like mobile networking platforms and fiber-optics, in October the company partnered with artificial intelligence powerhouse Nvidia to develop AI-powered platforms for 6G connectivity. This tech isn't just going to provide faster cellphone connections for consumers. It's needed to increase the capacity of mobile networks increasingly being used for data-intensive artificial intelligence applications.
NOK shares soared following that news, and have held most of their ground ever since. Given that this bullishness was so AI-dependent, however, any worry that undermines artificial intelligence stocks as a group isn't going to exclude this one.
NYSE: NOK
Key Data Points
It's also worth mentioning that, in a post-earnings interview with Reuters, Nokia CEO Justin Hotard made a point of commenting how Europe's and the United States' technology companies are dependent on one another. Against Thursday's backdrop, this could have been interpreted as a warning that recent trade tensions may be stifling Nokia's growth.
Opportunity knocks
As dramatic as Thursday's sell-offs are, it's probably not an omen of what's to come.
Most artificial intelligence stocks were already overvalued -- the market just needed the right reason to right-price them. Microsoft supplied it. Now these dips are opportunities to step into what's still the best investment opportunity of a generation, including Nokia's.
