Nokia's stock price tumbled to $9.73 on Thursday, marking a 5.35% drop and its lowest close since April 2026. This move wiped out the 0.618 Fibonacci retracement level at $10.41, a key support point, and continued a downward trend that began in early June.

Despite posting second-quarter earnings that exceeded expectations, with operating profit climbing 18% year-over-year to €434 million and net sales up 9% to €4.82 billion, investors remained cautious. The company doubled sales to AI and cloud clients to €446 million, setting a record €2.8 billion in new orders from this segment, buoyed by increased spending from hyperscalers in the optical business. However, CEO Justin Hotard's warning about persistent memory shortages into 2027 cast a shadow over the upbeat numbers. He noted that AI companies' heavy consumption of DRAM is tightening the supply and pushing component costs higher.

Legacy segments showed weakness as well. Fixed Networks revenue declined 13% due to delayed investments by telecom operators. Nokia also predicted flat operating profit for the third quarter compared to Q2, signaling cautious guidance amid challenging supply conditions.

The broader telecom equipment sector mirrored Nokia's struggles. Ericsson shares fell nearly 12% on July 14 after citing similar issues with memory cost inflation, dragging down peers. Meanwhile, the semiconductor memory sector faced pressures from profit-taking linked to the cooling AI frenzy, contributing to Nokia's unraveling despite an approximate 85% year-to-date gain recorded just a month ago.

Technical Indicators Point to Further Downside

Technically, Nokia’s stock has slipped steadily since peaking at $17.45 in early June. After breaking below the 0.382 Fibonacci retracement level at $13.10 in July, the recent breach of the golden pocket near $10.41 signals a shift from support to resistance. This flip suggests sellers have control now, highlighted by a surge in trading volume accompanying the drop.

The next key price objective sits near the 0.786 retracement at $8.50, about 12.6% below Thursday’s close. This level coincides with an area Nokia consolidated around in March and April, potentially adding some buying interest. On the flip side, reclaiming a close above $10.41 would challenge the bearish outlook.

Further confirmation comes from the daily Relative Strength Index (RSI), which recently broke below a rising support line that had held since November 2025. The loss of this momentum indicator indicates growing bearish pressure.