From Handsets to High-Performance Networks: Nokia’s AI Strategy Fuels a 178% YTD Rally

Nokia opens AI lab, shares surge 9.2% to 52-week high. Analysts upgrade on 49% AI/cloud revenue growth, but RSI signals overbought at 37.

Nokia’s metamorphosis from a struggling handset maker into a dedicated AI infrastructure provider passed a visible milestone on Thursday with the opening of its AI Network Innovation Lab in Sunnyvale, California. The facility, which will test and validate networking architectures for large-scale AI training environments, marks the company’s shift from concept to execution in the data-center space. The market wasted no time rewarding the move: on Friday, Nokia shares surged 9.2% to €13.30 on the Helsinki exchange, punching through to a new 52-week high. Year-to-date, the stock has climbed 178%, more than doubling from its start-of-year level.

The rally was turbocharged by a wave of analyst upgrades, led by Morgan Stanley. The bank raised its price target on Nokia’s Helsinki-listed shares from €11 to €14 and increased its target for the US-listed ADRs to $16.50, reaffirming the stock as a top pick in the AI sector. Morgan Stanley highlighted Nokia’s unique positioning in the booming data-center market, where demand for high-performance optical and IP networking is surging as hyperscalers build out generative-AI clusters. CFRA upgraded the stock from Hold to Buy and doubled its target to $16, while Argus initiated coverage with a Buy rating and a $15 target. JPMorgan, Deutsche Bank and Nordea also chimed in with positive revisions, underscoring a broad shift in how the investment community values Nokia — increasingly alongside optical-networking and AI-infrastructure peers rather than legacy telecom-equipment names.

The optimism is grounded in concrete numbers. Nokia sold its fixed-wireless-access (FWA) business to Inseego to concentrate on AI and cloud customers. In the first quarter of 2026, revenue from that client base jumped 49% and now accounts for 8% of total group sales. The Optical Networks segment grew 20% in the same period, and the company reported €1 billion in new orders from AI and cloud customers in a single quarter. For the full year, Nokia expects its Network Infrastructure segment to grow 12-14%, with Optical and IP Networks together expanding 18-20%. The company maintained its 2026 operating profit guidance of €2.0-2.5 billion (equivalent to roughly $2.34-2.93 billion, depending on the exchange rate).

Despite the euphoria, the technical picture flashes caution. The relative strength index (RSI) sits at 37, indicating the stock is already overbought after its rapid ascent. The share price now trades more than 100% above its 200-day moving average and sits just 5% below Morgan Stanley’s upgraded €14 target, leaving little room for disappointment. The next major catalysts are second-quarter order intake, continued momentum in Optical Networks, and the half-year report due in July. For a stock that has already priced in a great deal of optimism, the coming months will test whether the fundamentals can keep pace with the narrative.