Nokia Catches Cisco’s Tailwind as AI Networking Orders Drive 20% Growth Forecast

Nokia shares rallied 115% in 2025, driven by Cisco's $9B AI order forecast and doubled network growth guidance; analysts raise targets ahead of Q2 results.

The rally in Nokia’s stock has been one of the standout stories in European equities this year, but the latest leg higher owes much to a signal from across the Atlantic. Cisco Systems, the US networking giant and a direct competitor in routers and switches, raised its annual target for artificial-intelligence infrastructure orders from $5 billion to a whopping $9 billion. The news sent a powerful ripple through the entire sector, lifting Nokia’s shares along with it.

The Finnish group’s stock gave back some ground on Friday, easing to €11.96, but that does little to dent a year-to-date surge of roughly 115%. Just days earlier, the shares touched a fresh 2025 high of €12.55. The sustained climb reflects a fundamental shift in the business: Nokia’s network infrastructure unit, which supplies optical and IP networking gear for data centres and subsea cables, is now expected to grow by around 20% in 2026 — double the previous guidance.

Management has been busy reinforcing that message with product news as well. Nokia recently unveiled new AI-powered tools designed to detect and fix network faults automatically, paving the way for fully autonomous networks. The technology is squarely aimed at the booming market for AI and cloud networking, which industry forecasts see expanding at 27% annually through 2028.

For the current fiscal year, the board is targeting an operating profit of as much as €2.5 billion, with first-half business already tracking ahead of the midpoint of that range. The first quarter delivered a gross margin above 45%, and a healthy cash pile underpins operations. Yet the valuation has become a point of contention: Nokia now trades at 91 times trailing earnings, up from 35 a year ago.

Analysts are scrambling to adjust their fair-value estimates. JPMorgan doubled its price target to €12 with an overweight rating, while Deutsche Bank lifted its target to €8.50. Argus Research is even more bullish, setting a fair value of $15 per share. All three cite the accelerating AI demand as the primary catalyst.

Investors will get more clarity in the coming days. On Tuesday, Nokia’s technology chief Walid Wakim is scheduled to deliver a keynote speech at the ITW telecom conference in Maryland, where further details on data-centre connectivity are expected. Then on 23 July, the company will publish its second-quarter results — a report that could either rubber-stamp the current market optimism or give the sceptics fresh ammunition.