Nokia vs. Verizon: Which Telecommunications Stock Is a Better Buy for 2027?
Building a diverse portfolio often includes choosing between infrastructure providers and service operators. Should you invest in the equipment manufacturer Nokia Oyj (NOK +3.52%) or the service giant Verizon Communications (VZ -0.41%)?
Nokia focuses on the hardware and software that make modern networks possible, while Verizon sells connectivity directly to millions of consumer and business users. Both are central to the telecommunications ecosystem but offer different financial profiles. Investors must weigh Nokia’s infrastructure growth against Verizon’s established service revenue and cash generation.
The case for Nokia
Nokia provides the critical network infrastructure and software used by telecom providers, cloud companies, and governments. Its latest annual report, filed for 2025, shows that its connectivity reaches over 150 countries and supports more than 4.4 billion mobile subscriptions. The company operates across fixed, mobile, and optical networks, serving mission-critical enterprises as a key player among tech stocks globally.
In its 2025 fiscal year (FY), revenue reached $22.2 billion, which was a growth of roughly 3.5% over the previous year. The company reported a net income of approximately $726.4 million, compared to a higher profit in the preceding year. This resulted in 3.3% net margin, a metric that measures the percentage of total sales that remains as profit after all operating and non-operating costs are paid.
As of its December 2025 balance sheet, the debt-to-equity ratio was 0.2x. This ratio measures total debt against shareholder equity, and a lower number typically indicates that a company is not overly reliant on borrowing to fund its business. The current ratio, which compares short-term assets to short-term liabilities, was approximately 1.6x. Free cash flow, which represents cash from operations minus capital expenditures, was about $1.6 billion.
The case for Verizon
Verizon Communications provides wireless, broadband, and communications services to a massive base of consumer and business customers. As of its latest filings, it serves over 100 million wireless retail connections and maintains a strategic partnership with Amazon (AMZN -1.29%) for artificial intelligence infrastructure. The company operates wireline services in over 30 states and Washington, D.C., and is a dominant force in the industry.
In FY 2025, revenue reached $138.2 billion, an increase of about 2.5% compared to the prior fiscal year. The company generated a net income of $17.2 billion, maintaining strong profitability despite the competitive environment. This resulted in a net margin of 12.4%, which shows the efficiency with which the company turns its total revenue into actual bottom-line profit.
As of its December 2025 balance sheet, the debt-to-equity ratio was 1.9x. This ratio measures total debt relative to shareholder equity, and a figure above 1.0 indicates that a company has more debt than equity. The current ratio was 0.9x, while free cash flow reached $19.7 billion. Verizon uses this cash to sustain its vast network infrastructure and pay dividends to shareholders.
Risk profile comparison
Nokia faces risks from the cyclical nature of network equipment spending, as telecommunications providers may scale back investment during economic downturns. The company also operates in a global market where intense competition from large international rivals can lead to pricing pressure. Any delays in the adoption of 5G or fiber technologies could also impact its long-term growth and its ability to secure large-scale infrastructure contracts.
Verizon faces intense competition from national providers like AT&T (T +0.00%) and T-Mobile US (TMUS -0.43%) through aggressive promotional pricing. The company is also exposed to cybersecurity threats and the logistical challenges of integrating acquisitions like Frontier Communications and Starry. Furthermore, a significant debt load of over $130 billion makes the company more vulnerable to interest rate changes and broader financial market volatility.
Valuation comparison
Verizon appears cheaper based on its Forward P/E and P/S ratio, which measures market value against sales over the past twelve months.
MetricNokia OyjVerizon CommunicationsForward P/E21.0x8.9xP/S ratio2.0x1.3x
Valuation metrics include sourcing from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy for 2027?
Nokia and Verizon are titans in the telecommunications industry, yet of the two, I would buy and hold Verizon stock for 2027 and beyond. Several reasons drive this decision.
Verizon offers a robust dividend, yielding over 6% as of Nov. 11, and has raised this payment for the last 20 consecutive years. Nokia provides a far more modest 1.6% yield. Verizon’s massive debt load from acquisitions, particularly for internet provider Frontier, has pushed up its debt-to-equity ratio, but if the company is conservative about future purchases, it produces the free cash flow to pay down debt and continue to grow the dividend.
In addition, Verizon stock is a bargain compared to Nokia based on both forward earnings and sales multiples. Nokia is trying to boost sales by targeting the artificial intelligence boom through its AI radio access network (AI-RAN) technology, which transforms 5G networks from a passive data pipe into one where AI intelligently manages traffic for better speed, coverage, and capacity. If AI-RAN takes off, Nokia may eventually be worth its higher valuation, but for now, Verizon looks like the superior stock to own going into 2027.
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Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.