Nokia's Defense Pivot with Anduril and AI-Driven Cloud Boom Lift Shares to 16-Year High

Nokia rides AI infrastructure wave with Nvidia partnership and pivots to military-grade secure networks, pushing ADR above $16 and earnings up 54%.

Nokia has become a rare double-play in European markets. The Finnish telecom equipment maker is simultaneously riding the artificial intelligence infrastructure wave and repositioning itself as a supplier of secure networks for military and critical infrastructure. The combination has propelled its American Depositary Receipt above $16 for the first time in years and left the stock on track for its best annual performance since 1999.

The ADR closed at $16.46 on May 26, a gain of 6.40% in a single session. In Frankfurt, the ordinary shares trade at €13.35, down 0.71% on the day but still up 139.67% since the start of the year. That rally has been fuelled by a string of analyst upgrades and a strategic investment from Nvidia.

AI Infrastructure Accelerates

Nvidia invested $1 billion in Nokia back in October 2025, buying into the stock at $6.01 per share and acquiring roughly a 3% stake. The deal centred on AI-RAN, a platform that combines AI workloads with mobile network infrastructure. T-Mobile signed on as the first deployment partner, and Nokia now counts ten public customers including Deutsche Telekom, Vodafone, SoftBank and NTT Docomo.

The financial impact is already visible. First-quarter revenue rose 4% to €4.5 billion, with comparable operating profit surging 54% to €281 million. Earnings per share climbed from €0.03 to €0.05, beating consensus by around 31%. More tellingly, revenue from AI and cloud customers jumped 49% and now represents 8% of group sales.

Nokia raised its growth forecast for optical and IP networks to 18-20%, up sharply from the previous 10-12% range. The addressable market for AI and cloud infrastructure is now seen expanding at 27% annually through 2028, compared with a 16% estimate only five months ago. In the first quarter alone, the company added more than €1 billion in new AI orders.

Analysts have scrambled to catch up. SEB Equities upgraded Nokia from Hold to Buy on May 27, reversing its own downgrade from two months earlier. Morgan Stanley’s Terence Tsui calls Nokia a top pick, raising the price target from €11 to €14. CFRA shifted from Hold to Buy with a $16 target, Argus rates it Buy at $15, and the S&P Global consensus shows 11 analysts at Buy with an average price target of $12.90.

Defense Emerges as Second Growth Engine

While AI grabs the headlines, Nokia has quietly built a parallel narrative around secure communications for defence and critical infrastructure. At the CANSEC 2026 trade show in Ottawa, the company showcased tactical 4G and 5G networks, quantum-safe encryption, and digital backbones tailored for military use.

The defense push is anchored in the Network Infrastructure division, which posted first-quarter revenue of €1.829 billion, up from €1.639 billion a year earlier. The unit's gross margin improved to 43.4% from 41.9%. Nokia expects Network Infrastructure revenue to grow 12-14% in 2026 on a currency- and portfolio-adjusted basis, with IP and optical networks leading the way at 18-20%.

A concrete step came in March 2026, when COBBS BELUX, Anduril Industries and Nokia Belgium announced a consortium to build counter-unmanned aerial systems in Belgium. The solution will protect military sites and critical infrastructure by fusing data from radar, optical sensors, radio-frequency sources and acoustic detectors into a single command-and-control layer.

Nokia also highlighted quantum-safe encryption on the show floor, covering optical, Ethernet, MPLS and IP layers, as well as AES-256 network encryption. These capabilities extend beyond defence to any operator of critical infrastructure that requires resilient data links and tamper-proof key management.

Financial Framework and Near-Term Catalysts

The two growth stories rest on the same financial foundation. Nokia’s comparable operating profit guidance for 2026 stands at €2.0-2.5 billion, and CEO Justin Hotard has indicated the company is tracking above the midpoint of that range. Capital expenditure for 2026 is set at €900 million to €1.0 billion, partly to expand optical manufacturing capacity.

The stock’s next trigger points include Ciena’s earnings release in early June, which could provide a read-across for optical networking demand, and the potential inclusion of Nokia in the Euro Stoxx 50 index in September. Second-quarter results are due at the end of July, and field tests with Nvidia and T-Mobile are scheduled for later in the year. Investors will be watching closely for whether the defence pitch can generate order books to match the AI momentum.