Nokia's AI Pivot Drives Shares to Historic Heights, But Valuation Raises the Bar

Nokia shares hit 16-year highs after Cisco's AI orders surge and Nokia's own €1B AI bookings, prompting JPMorgan to double price target.

A powerful tailwind from Cisco’s blockbuster results has lifted Nokia to levels not seen in sixteen years, with the Finnish network equipment maker riding the AI infrastructure wave like never before. While the stock slipped 0.71% to €12.51 on Thursday—just shy of its 52-week high of €12.60—the broader trajectory is unmistakable: shares have surged roughly 125% since the start of the year and 174% over the past twelve months.

The catalyst was Cisco’s disclosure that its AI infrastructure orders had jumped 152% year-over-year, a signal that bolstered the entire networking sector. But the real firepower came from Nokia’s own numbers. In the first quarter, the company booked AI-related orders exceeding €1 billion—an amount analysts describe as transformative for a business long seen as a sluggish telecom supplier. The AI and cloud segment alone grew 49% from a year earlier, now representing 8% of total revenue.

That performance has forced a radical rethink among analysts. JPMorgan doubled its price target from €6.90 to €12.00, maintaining an "Overweight" rating and arguing that Nokia has undergone a structural shift from a low-margin telecom equipment maker to a pure-play AI growth company. Morgan Stanley followed with an €11.00 target and a positive stance, while Argus upgraded the stock to "Buy" with a US$15 price objective. Jefferies sketched a bull-case fair value of €14.20.

Management has reinforced the narrative by significantly bumping its growth forecasts. Nokia now expects its network infrastructure segment to expand 12% to 14% this year, up from a prior mid-single-digit range. More striking is the long-range outlook for AI and cloud services: the company projects a compound annual growth rate of 27% through 2028, nearly double the earlier estimate of 16%.

To execute on that ambition, Nokia named Emma Falck as president of its Mobile Infrastructure division, effective September 2026. The physicist and former Siemens executive will oversee the transition to "Physical AI" and AI-native architectures for 5G Advanced and 6G networks, with a mandate to accelerate software-driven infrastructure through open interfaces and partner ecosystems. CEO Justin Hotard called the appointment a direct response to the industry's evolving needs.

Yet the market is already pricing in a great deal of future success. Nokia trades at roughly 91 times trailing earnings, up from a multiple of 35 just a year ago. While forward estimates (around 30–37 times earnings) offer a more tempered picture, the valuation leaves little room for disappointment. Industry peers such as Arista Networks trade at even higher multiples—often above 45—but Nokia’s discount to Cisco and Dell could shrink further if it delivers on margin expansion.

On that front, there are encouraging signs. After closing the Infinera acquisition, Nokia reported a comparable gross margin of 45.5% for the first quarter. The balance sheet remains solid: net cash stood at €3.8 billion, providing firepower for further integration and a €0.14 per-share dividend. At the same time, the company is tidying up its portfolio—the fixed-wireless-access terminal business is being sold to Inseego, with a small equity stake in return, a deal expected to close in the fourth quarter of 2026.

With the rally priced in, the pressure now shifts to execution. Nokia must convert its record AI order pipeline into recurring revenue and demonstrably higher profits. As one analyst put it, a compelling story will only carry the stock so far.