Nokia (NOK) shares took a hit on Friday, falling about 5.5% to $9.19, even though the company reported a solid earnings beat on Thursday. The disconnect? A broader tech sell-off, some supply chain warnings from management, and maybe a bit of AI optimism already priced in.

The Nasdaq was down 0.87% on the day, and the technology sector was the only one in the red, losing 1.1%. So Nokia wasn't alone in its misery. But the company's own news added to the pressure.

Q2 Earnings: The Good Numbers

Nokia's second-quarter net sales came in at 4.82 billion euros ($5.60 billion), up 8% year-over-year (9% on a constant-currency basis). That edged past analyst estimates of $5.59 billion. Adjusted earnings per share were $0.08, beating the consensus of $0.07.

Network Infrastructure was a standout, with revenue up 12% year-over-year, driven by a 19% jump in Optical Networks and a 15% gain in IP Networks. Mobile Infrastructure also grew, up 6%.

AI Is Becoming Nokia's Biggest Growth Story

AI and cloud revenue more than doubled, rising 103% year-over-year, and now make up 9.3% of total group sales. During the quarter, Nokia secured 2.8 billion euros in orders from AI and cloud customers. That's a big deal for a company that many still think of as a legacy telecom equipment maker.

Nokia also agreed to buy a chip fabrication campus in Chandler, Arizona, from NXP Semiconductors (NXPI). That move signals Nokia's ambition to get more vertically integrated in the semiconductor space, especially as AI demand drives need for custom chips.

Supply Chain Warnings Cast a Shadow

CEO Justin Hotard told Bloomberg on Thursday that memory remains the industry's biggest supply constraint, and management expects shortages to continue through 2027. That's a sobering note for a company that's riding the AI wave — AI workloads are memory-hungry, and if the supply isn't there, growth could be capped.

Still, Nokia raised its full-year 2026 comparable operating profit forecast to between 2.1 billion euros and 2.6 billion euros, up from previous guidance. So the long-term outlook isn't all gloom.

Technical Picture: Oversold but Still Under Pressure

From a chart perspective, Nokia is in a tough spot. The stock is trading 19.9% below its 20-day simple moving average (SMA) of $11.55 and 31% below its 50-day SMA of $13.41. That's a clear downtrend in the intermediate term. But it's only 1.9% above its 200-day SMA of $9.07, making that level a critical support for longer-term holders.

Momentum-wise, the relative strength index (RSI) is at 29.76, which is oversold territory. That could mean a bounce is possible, but it's not guaranteed. The moving averages are mixed: the 20-day SMA is below the 50-day SMA (bearish), but the 50-day SMA is still above the 200-day SMA, thanks to a golden cross that happened back in October. So the long-term trend is still technically bullish, but the near-term pain is real.

For now, Nokia investors are watching the $9 level like a hawk. If that breaks, things could get uglier. But with AI orders piling up and earnings beating estimates, the fundamental story is still intact — it's just that the market is in a foul mood today.