Nokia’s $1 Billion Nvidia Bet Faces Analyst Doubts as Stock Wavers After Rally

Nokia partners with Nvidia for AI-driven 6G platform; shares slip amid analyst skepticism despite long-term potential in AI networking and 5G markets.

Nokia has placed a massive bet on artificial intelligence, forging a partnership with Nvidia valued at roughly $1 billion to embed AI directly into the telecom networks of the future. The two companies are jointly developing an AI RAN 6G platform that uses machine learning to optimise radio frequencies and data traffic, with Nokia integrating Nvidia processors into its existing 5G infrastructure. The move positions the Finnish telecom group at the intersection of two high-growth markets — next-generation mobile connectivity and AI-driven data centre networking.

The initial market reaction, however, has been muted. Nokia shares edged lower on Monday, slipping to €11.29, as a sceptical analyst note tempered the enthusiasm generated by the alliance. Simon Coles of Barclays reiterated his “underweight” rating, lifting his price target only modestly from €8.00 to €8.50 — still well below the current trading level. Coles argues that the broader sector is entering a critical hardware cycle and that pure-play semiconductor and equipment names such as ASML, ASM International and TSMC offer better exposure than a telecom gear maker pivoting into AI.

The caution comes against a backdrop of upheaval in the technology complex. In June 2026, the so-called “Magnificent Seven” US tech giants collectively lost more than $2.7 trillion in market value, and semiconductor stocks, which had surged 85% since March, came under heavy selling pressure. Nokia has not been immune: its shares have shed roughly 11% over the past week and now stand nearly 25% below the 52-week high hit in early June. The annualised volatility hovers close to 75%, underscoring the stock’s recent turbulence.

Yet the underlying market data supports Nokia’s strategic direction. Gartner forecasts worldwide data-centre spending of nearly $788 billion in 2026, while IDC projects that the AI infrastructure market will surpass $1 trillion by 2029. In the 5G segment alone, cumulative industry revenues could exceed $150 billion through 2027. Nokia aims to capture a meaningful share by supplying the optical and networking hardware that connects AI data centres — an ambition built on years of acquisitions. The 2015 takeover of Alcatel-Lucent brought critical optical technologies, and last year’s purchase of Infinera strengthened that capability further.

Nokia’s management has also revised its outlook for the network infrastructure division, focusing increasingly on high-margin software and AI hardware. First practical trials of the new AI-enabled architecture are already under way with T-Mobile and Orange, testing the integrated system in real-world conditions. The results of those tests will be pivotal in determining whether the partnership can deliver on its long-term promise.

Despite the recent pullback, Nokia’s stock has more than doubled since the start of 2026, posting a year-to-date gain of roughly 103%. That rally was fuelled by enthusiasm around the Nvidia tie-up and a broader AI-driven re-rating of the sector. The Relative Strength Index now stands at 42.4, a neutral reading that suggests the shares are neither overbought nor oversold after the correction.

The gap between the equity’s recent performance and Barclays’ cautious view highlights the tension in the stock. While the Nvidia alliance offers a structural growth story in telecom infrastructure — one that is less reliant on short-term chip demand — the market is demanding concrete earnings proof. Nokia must translate its ambitious AI roadmap into hard profit, especially as competitors in both telecom equipment and data-centre networking are accelerating their own efforts.

For now, the bearish camp argues that the rally has outpaced the underlying fundamentals. Barclays’ Coles sees little room for sustained upside until Nokia demonstrates that its pivot to AI-driven connectivity can generate the margins investors expect. The partnership with Nvidia may be a bold strategic move, but the verdict from the stock market — and from the field trials with T-Mobile and Orange — will ultimately determine whether Nokia’s transformation is a breakthrough or just another costly detour.