Nokia’s Twin Engines of Growth: AI Networking and Defense 5G Drive Stock to 16-Year High

Nokia pivots from handset maker to AI networking and military 5G supplier, with shares at 16-year highs. Revenue from AI cloud surges 49%, and JPMorgan doubles price target.

The narrative around Nokia has shifted so dramatically in 2024 that the company now bears little resemblance to the handset-maker of old. A 114 percent rally since January has propelled shares to levels not seen in 16 years, with the stock touching €12.55 last week. Friday’s close of €11.96 – a 4.13 percent dip – marked a modest pause, but the broader trajectory remains unmistakably upward.

Two distinct growth engines are powering the revaluation. On one side, Nokia has reinvented itself as a supplier of networking gear for AI-heavy data centres; on the other, it is carving out a role in military communications via a new 5G partnership.

AI Infrastructure Takes Centre Stage

The clearest sign of Nokia’s transformation lies in its AI and Cloud segment. In the first quarter, revenue from that division surged 49 percent, bringing its share of total group sales to 8 percent. The company has already secured billions of euros in AI-related orders in just three months, and management has lifted the segment’s expected annual growth rate to 27 percent through 2028.

That momentum is backed by real-world deployments. Nokia is now equipping 30 facilities operated by US data-centre owner CoreSite with high-performance routers designed to handle demanding AI workloads. Both Microsoft and Apple have turned to Nokia’s platforms – Apple has been using the technology for several years to support its own infrastructure.

The sales figures underscore the shift. Net sales in the first quarter came in at €4.5 billion, with comparable group revenue up 4 percent year-on-year. But it is the AI piece that now drives investor enthusiasm, even as Nokia continues to serve its traditional telecom base.

Defence: A Second Arrow in the Quiver

A less-heralded but equally important catalyst emerged from Nokia’s partnership with Lockheed Martin. Nokia Federal Solutions and the defence giant have jointly developed a modular 5G solution for US and allied armed forces, designed to deliver secure, robust battlefield communications.

The technology uses an open architecture that allows military vehicles and mobile platforms to integrate commercial 5G gear into standardised systems. That approach cuts integration costs and makes the offering attractive to international defence programmes. For Nokia, the defence angle is far from a side project; if NATO members increasingly embed 5G into mission-critical systems, the company’s established reputation for reliability and security gives it a natural edge.

Analysts Rewrite Their Forecasts

The strategic pivot has not gone unnoticed on Wall Street. JPMorgan recently doubled its price target to €12 and reiterated an overweight rating. Argus upgraded the shares to “buy” following the strong quarterly numbers, citing robust demand for AI infrastructure and improved profitability.

After Nokia’s acquisition of US rival Infinera, the group reported a gross margin of 45.5 percent. Management has set an operating profit target of roughly €3 billion by 2028, which requires the network infrastructure margin to climb to as much as 17 percent. The integration of Infinera and a tight focus on optical networking are seen as the building blocks for hitting that number.

Portfolio Reshaping and the Road Ahead

To free up resources for the higher-margin AI business, Nokia is shedding non-core assets. The sale of its fixed-line broadband unit to Inseego is expected to close in the fourth quarter of 2026. While the deal is financially small, it signals a relentless focus on the so-called AI super-cycle.

On the product side, Nokia has introduced agentic AI capabilities into platforms such as Altiplano, Corteca and Broadband Easy. These systems automate network operations, improve predictive maintenance and reduce outages – a value proposition that resonates with telecom operators looking for both efficiency and data sovereignty. The company estimates that spending on agentic AI in the telecom sector will reach $6.2 billion by 2030.

Technically, the stock has run well ahead of its moving averages. The current price sits well above the 50-day average of €8.59 and nearly double the 200-day average of €6.01. The relative strength index of 59.7 suggests no extreme overheat, but the move remains steep.

Investors now have their eyes on the next quarterly report due on 21 July 2026. Until then, fresh AI infrastructure deals, defence contracts and spending signals from major cloud and telecom clients are likely to set the pace. Nokia has sold a new story – the market is waiting to see if the numbers can keep up.