Nokia Oyj's stock experienced a sharp pre-market plunge of 5.50% on Thursday, marking a significant reversal from its recent positive performance. The decline comes as investors lock in profits following a substantial rally and amid broader weakness in the communication equipment sector.

The pre-market sell-off is attributed to notable profit-taking pressure. Nokia's shares had surged approximately 18% from a low on May 29 to an intraday high earlier this week, driven by multiple catalysts including a strategic equity investment from NVIDIA of approximately $1 billion for roughly 3% of the company, momentum from the NVIDIA GTC Taipei conference, and strong first-quarter earnings showing adjusted operating profit up 54% year-over-year with AI and cloud revenue growing 49%. The rapid accumulation of these short-term gains prompted investors to take profits.

Furthermore, the broader communication equipment sector faced headwinds, which weighed on market sentiment. Several industry peers including Arista Networks, Lumentum, Applied Optoelectronics, and Ciena also traded lower, creating a sector-wide linkage effect that amplified selling pressure on Nokia. Additionally, weakness in Nokia's Helsinki-listed shares in European markets further contributed to the negative sentiment in U.S. pre-market trading.