Nokia’s Re-Rating Accelerates: From Telecom Stalwart to AI Infrastructure Play

Nokia’s stock has more than doubled since the start of the year, climbing roughly 112% as the Finnish telecom equipment maker rides a wave of AI-driven demand that has reshaped its investment narrative. The shares closed last week at €11.96, their highest level in 16 years and well above the €8.50 price target the Deutsche Bank had set only days earlier. That gap between analyst forecasts and market reality underscores how swiftly the revaluation has unfolded — the 200-day moving average of €6.05 sits nearly 50% below the current price.

The immediate catalyst came from Cisco’s quarterly report, which revealed a 12% revenue jump to $15.84 billion and a 25% surge in networking sales, far exceeding expectations. Cisco also more than doubled its full-year AI infrastructure order outlook to $9 billion. Since Nokia competes directly with Cisco in routers, switches and transceivers, the ripple effect was immediate. Jefferies analyst William Beavington called the strong guidance “equally positive for Nokia’s prospects,” and Nokia’s stock jumped more than 7% on the day.

Beyond the Cisco headline, Nokia has been quietly building a more durable growth story. The company’s optical networks division — boosted by the 2024 acquisition of US specialist Infinera — grew 20% in the first quarter of 2026, with management lifting its full-year growth forecast for the optical and IP segment to around 20%, double the previous estimate. Optical connectivity is increasingly viewed as a critical bottleneck in AI data centers, and Nokia’s partnership with Nvidia in AI-powered radio networks adds another layer of validation.

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

The transformation extends to product innovation. Nokia recently unveiled an “agentic AI” system for its broadband networks, designed to automate fault detection and speed up fiber rollout using data from 600 million installed connections. The goal is to cut physical on-site interventions by half while sharply improving technical support success rates. Industry estimates suggest the telecom sector will spend roughly $6.2 billion on such autonomous AI solutions by the end of the decade, a market Nokia is positioning itself to capture.

Strategically, the company is also refreshing its leadership. Emma Falck, a physicist with a background in computational physics and a stint at Siemens, will take over the mobile networks division on September 1, tasked with accelerating Nokia’s push into open network architectures and 6G. Meanwhile, at the International Telecoms Week in Maryland, Nokia’s technology vice president Walid Wakim is delivering a keynote on “Connectivity 2030,” potentially laying out further AI strategy details that could provide the next catalyst.

Financially, the deck is stacked in Nokia’s favor but leaves little margin for error. The company posted Q1 2026 revenue of $5.26 billion (around €4.9 billion) and maintains its operating profit target of €2.0–2.5 billion for the year. Gross margin has improved to 45.5% following the Infinera integration, and net liquidity stands at €3.8 billion. The board has been authorized to buy back up to 550 million shares through October 2027, though the program has not yet been activated — any move this week would signal management’s confidence in the rally.

Eighteen analysts rate the stock a “Moderate Buy” on average, but the current price-earnings ratio of roughly 34 sits well above the sector average of 25. Argus Research has set a price target of $15 per ADR, while JPMorgan sees fair value at €12. The next hard data point will be the half-year results on July 23, where any operational disappointment could quickly deflate the premium the market has awarded Nokia’s AI pivot.

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