Nokia's Twin-Track Strategy: Portfolio Slimming Meets AI-Fueled Growth

Nokia shares double in 2026 as optical networks surge 20% and the company sells low-margin FWA hardware to Inseego, boosting investor confidence.

The Finnish telecom equipment maker is executing on two fronts simultaneously, and investors are rewarding the approach. Nokia shares touched a fresh 52-week high of €11.42 on Monday, extending a rally that has more than doubled the stock's value since the start of the year.

The catalyst? A potent combination of surging demand for AI-driven cloud infrastructure and a decisive pivot away from lower-margin hardware businesses.

Optical Networks Lead the Charge

Nokia's first-quarter operating profit jumped 54% year-on-year to €281 million, comfortably beating analyst estimates. The standout performer was the optical networks division, where revenue climbed 20% as hyperscalers and telecom operators rushed to upgrade data highways for artificial intelligence workloads.

Orders from AI and cloud customers surged nearly 50% in the first three months of 2026 alone, with the company booking billions in new business. Management now expects the network infrastructure segment to grow between 12% and 14% for the full year, a sharp upward revision from the previous single-digit forecast. Within that, optical and IP networks are projected to expand by 18% to 20%.

For the current quarter, Nokia anticipates sequential revenue growth of 5% to 9%, with the next detailed update due on July 23 when half-year results are published.

Exiting Hardware, Entering Inseego

In a move that underscores the strategic shift, Nokia agreed late last month to sell its fixed wireless access customer-premises equipment business to US-based Inseego. The division generates roughly $200 million in annual revenue but carries thin margins and heavy capital requirements — a poor fit for a company now laser-focused on high-growth infrastructure.

The deal structure is notable. Inseego is paying $15 million in stock plus $5 million in warrants, while Nokia is injecting an additional $10 million directly into the buyer. The Finnish group will emerge with an approximately 11% stake in Inseego, maintaining a toehold in the FWA market without the operational drag.

Nokia is also providing up to $38 million in EBITDA support during the first year, with a profit-sharing arrangement covering the subsequent 24 months. The transaction is expected to close in the fourth quarter of 2026, subject to regulatory approvals. For Nokia, the financial impact is immaterial.

The two companies plan to continue collaborating on 6G, wireless edge, and 5G monetization initiatives.

Dividend and Shareholder Returns

Shareholders are not being left out of the story. The board declared a quarterly dividend of €0.04 per share on April 23, payable on May 7. That follows the annual payout for fiscal 2025, which also goes out on May 7 with an April 28 record date.

Under the authorization granted at the annual general meeting on April 9, management retains capacity for additional distributions of up to €0.10 per share this year.

Market Response

The market has given the dual-pronged strategy a thumbs-up. Nokia shares climbed nearly 6% on Friday to $13.64 in US trading, with Inseego posting similar gains. Counterpoint Research estimates the deal could nearly double Inseego's revenue and strengthen its position in the global wireless broadband market.

The real test will come in the second half of 2026, when third-quarter results will reveal whether the growth trajectory in Nokia's core AI infrastructure business can be sustained. For now, the company is delivering on both portfolio cleanup and top-line expansion — a combination that has investors betting the turnaround has legs.