From Commodity to Catalyst: Nokia’s AI and Defense Pivot Powers a 118% Rally

Nokia has shed its reputation as a lumbering telecom equipment maker. The Finnish group’s shares have surged roughly 118% year-to-date, a run that has carried them to within striking distance of a 16-year high. The stock traded at €12.17 in recent sessions — just shy of May’s 52-week peak of €12.55 — though another reading placed the price at €12.08, underscoring the volatility of the rally. In the past 30 days alone, the equity has added nearly 40%.

Behind the move lies a deliberate strategic shift. Nokia is repositioning itself as a supplier of AI-native network infrastructure, betting that telecom operators and enterprises alike will need to upgrade their systems to handle the demands of machine learning workloads. In May, the company unveiled what it calls “agentic” AI tools — autonomous software that designs, plans, and manages fiber and Wi-Fi networks, cutting fault-resolution times and pushing customer-service fix rates above 50%. The goal: higher user satisfaction and lower operating costs for carriers.

The defense sector has become a second growth leg. Nokia recently struck a cooperation agreement with Lockheed Martin to develop secure 5G solutions for military applications, tapping into rising government spending on hardened communications. That deal complements a broader push to diversify revenue beyond traditional telecom gear. “We’re building the infrastructure that makes AI work, whether in a data center or on the battlefield,” CEO Justin Hotard told analysts.

Should investors sell immediately? Or is it worth buying Nokia?

Analysts have taken notice. Deutsche Bank reaffirmed its buy rating on the stock last month and lifted its price target, while JPMorgan raised its target to €12.00, citing the expanding network-infrastructure business. Argus Research sees fair value at $15.00. The orders picture supports the optimism: bookings in the telecommunications segment are accelerating, particularly for high-performance optical systems and IP networking, a trend that Cisco’s strong quarterly results reinforced.

To manage the transition, Nokia is shaking up its management. Emma Falck will take over the Mobile Infrastructure division in September 2026, with a mandate to drive a software-focused strategy and prepare the unit for the eventual shift to 6G standards. The company’s guidance for the current year remains unchanged: comparable operating profit of €2.0 billion to €2.5 billion. The optical networks unit, where growth is strongest, will be the key to hitting that target. The market will get its next read on progress when Nokia reports quarterly figures at the end of July.

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