Nokia’s AI-Fueled Rally Has Already Left Analysts’ Fair Value Estimates in the Rearview Mirror

Nokia shares triple from 52-week low to €11.96, driven by 49% AI/cloud revenue growth and a raised forecast, yet analysts' average target remains far below current price.

The numbers tell a jarring story. Nokia’s shares closed at €11.96 in Helsinki on Friday, more than triple their 52-week low of €3.49 and up roughly 115% since the start of the year. Yet Deutsche Bank’s upgraded target of €8.50 — raised just days ago — sits comfortably below that level. The bank reaffirmed its buy rating, but the market has already assigned a far higher price to the Finnish network equipment maker.

What explains the disconnect? A surge in orders from hyperscale cloud providers hungry for optical interconnects has rewritten Nokia’s growth narrative. In the first quarter, revenue from artificial intelligence and cloud customers jumped 49% year over year, delivering roughly €1 billion in new optical-networking orders alone. Management responded by sharply lifting its full-year growth forecast for the networking infrastructure segment to 12–14%, up from the earlier 6–8% range. The combined optical and IP networking business is now expected to expand 18–20%, compared with a prior projection of 10–12%.

That optimism was reinforced by a sector-wide tailwind. On Wednesday, May 13, Nokia’s U.S.-listed shares surged nearly 12% — their best single-day gain in about seven months — after Cisco reported strong quarterly results that lifted the entire networking space. The euphoria proved short-lived: the stock declined on both Thursday and Friday, losing over 4% on the final trading day of the week. Even so, the 12-month return stands at roughly 158%, a figure that underscores how dramatically the company’s fortunes have changed since it pivoted from mobile radio gear toward the infrastructure powering AI data centers.

The shift is not just about current orders. Management now expects the addressable AI and cloud market to grow at a compound annual rate of 27% through 2028, well above the 16% previously anticipated. CEO Justin Hotard described the environment as an “accelerating AI super-cycle,” noting that the major hyperscalers have earmarked more than $700 billion in total capital expenditure. Nokia is betting its own future on that wave, boosting capital spending to €900 million–€1 billion to expand optical manufacturing capacity.

On the product front, the company has been embedding artificial intelligence directly into its offerings. On May 15, Nokia announced it would integrate generative AI into its converged-charging solution; two days earlier it unveiled new AI-agent features for fixed-network products. The moves signal a deepening commitment to software differentiation even as the hardware side of the business collects the bulk of the order flow.

Analysts on the whole are cautious about valuation. Of 18 analysts covering the stock, 12 rate it a buy, four a hold, and two a sell. The average price target stands at roughly $9.71 — still far below the current share price, suggesting that many have not yet fully incorporated the recent rerating. Meanwhile, shareholders are collecting a modest dividend: a first tranche of €0.04 per share was paid in early May, part of a total capped at €0.14 per share for the 2025 financial year.

Investors will have fresh opportunities to gauge Nokia’s trajectory starting May 19, when CEO Justin Hotard speaks at the J.P. Morgan technology conference in Boston and Nokia participates as a gold sponsor at the International Telecoms Week, where a keynote on “Connectivity 2030” is scheduled. With no major corporate events in the immediate calendar after that, the next concrete test of the current valuation will come when the company reports second-quarter results. For now, Nokia’s stock is trading on a story of transformation — and the market is clearly pricing in a future that analyst models have not yet caught up with.