From Telecom Stalwart to AI Infrastructure Play: Nokia’s Stock Surge Gains Institutional Backing

Seven analysts boosted ratings or targets as Nokia’s optical and AI revenue surges, Q1 earnings beat estimates, and a new innovation lab opens in Silicon Valley.

The market's reassessment of Nokia has been anything but gradual. In a compressed span of days, seven analysts — CFRA, Argus, JPMorgan, Morgan Stanley, Deutsche Bank, Arete and Nordea — either upgraded their ratings or raised price targets, delivering what amounts to an unusually concentrated wave of institutional conviction. Morgan Stanley pushed its target to €14 from €11 on May 24, keeping a Buy rating, while CFRA more than doubled its target to $16 and switched from Hold to Buy, reclassifying Nokia as an optical-networking and AI infrastructure name rather than a legacy telecom equipment supplier.

The share price has responded in kind. At Friday’s close in Helsinki, Nokia stood at €13.30, its highest level in over a year and the strongest since 2010. Year to date, the stock has advanced roughly 139 percent, with a 30-day gain of nearly 50 percent. The US-traded ADRs set a record close at $15.47, up 9.1 percent on the day, after touching an intraday high of $15.78. The run from late April alone amounts to about 43 percent.

What underpins the enthusiasm is a combination of tangible financial results and a rapidly shifting narrative. In the first quarter of 2026, Nokia generated net sales of €4.5 billion, a currency-adjusted increase of 4 percent. Comparable gross margin expanded by 320 basis points to 45.5 percent, while operating profit jumped 54 percent to €281 million, comfortably surpassing the consensus estimate of €250 million. The AI and cloud segment stood out: revenue from those clients grew 49 percent, and Nokia secured roughly €1 billion in new AI-related orders. That segment now accounts for 8 percent of total revenue, still modest but growing far faster than the core telecom business.

The optical and IP networks unit, central to the new thesis, saw its growth target raised to 18–20 percent from a prior 10–12 percent — a revision that analysts view as the single most important catalyst for the re-rating. CEO Justin Hotard, speaking at the J.P. Morgan technology conference on May 19, highlighted the combination with Infinera as a key strategic move, giving Nokia a portfolio of four DSPs and 13 platforms. Optical networks, he argued, form the backbone of modern data centers and cloud architectures; the company is seeing strong order inflows and new product launches that should support both revenue growth and margin improvement.

To accelerate that momentum, Nokia opened its AI Networking Innovation Lab in Sunnyvale, California. The facility allows partners — including AMD, Lenovo, Supermicro, Keysight and others — to test interoperability, simulate bottlenecks and validate architectures for large-scale AI training and real-time inference. Keysight has already published benchmarks for several AI transport standards, including UEC and RoCEv2. The lab’s purpose is to turn theoretical blueprints into deployable designs for hyperscale data center operators.

Hotard, who joined from Hewlett Packard Enterprise and previously spent years at Intel, has also been reshaping the management bench. Emma Falck, recruited from Siemens, will take over as president of the Mobile Infrastructure division on September 1, 2026, a move that signals continuity in the pivot toward higher-margin businesses like private 5G networks and defense applications.

Regulatory tailwinds have reinforced the story. The Federal Communications Commission’s public safety bureau granted conditional approval for Nokia’s Beacons and ONT devices, explicitly exempting them from restrictions on foreign consumer WLAN routers. Both the Department of Defense and the Department of Homeland Security confirmed that the products pose no security risk. Nokia further committed to manufacturing its next-generation WLAN 8 gateway in the United States. Other companies receiving similar clearance include Netgear, Adtran, Eero and Calix.

The balance sheet provides additional comfort. Nokia holds a net cash position of €3.8 billion, giving it flexibility to invest in the optical and AI push. Deutsche Bank had already raised its target to €8.50 from €7.50 with a Buy rating, and JPMorgan joined the upgrade wave with an Overweight call.

The next major test comes in July, when Nokia reports second-quarter results. By then, the market will look for evidence that the order momentum in the AI and cloud business is not a one-off and that the margin expansion can be sustained. Without visible follow-on contracts, the heavy expectations built into the current valuation could quickly become a burden. But for now, the company that was once written off as a legacy telecom equipment maker has become one of the most interesting names in the AI infrastructure trade.