Nokia's San Jose Plant and AI-RAN Timeline Take Centre Stage as BofA Reiterates Buy

Nokia's investment case now rests on a single question: can the growth opportunities it has sketched out be converted into durable business? BofA Securities answered in the affirmative on Tuesday, reaffirming its buy rating with a price target of 13.50 euros. With the stock trading at 7.65 euros, investors must decide how much of that gap they are willing to pay for ahead of execution.

Analyst Oliver Wong anchored his view on the optical networks business, following a round of investor meetings in Switzerland. His price target is built on a sum-of-the-parts valuation, meaning the bullish call reflects the combined worth of Nokia's individual divisions and their room to expand rather than a single headline number.

Optical Growth Is the Yardstick

The company has described the prospect of 25–30% growth in Optical & IP Networks for 2027 as direction-setting. That range is the central test of the optimistic thesis, and shareholders should treat it as an expectation against which actual performance will be measured. The more firmly Nokia underpins it with operating progress, the more credible the argument for a higher valuation becomes; any shortfall would sap conviction from the analyst view.

A concrete near-term checkpoint is the indium phosphide (InP) fab in San Jose, scheduled to begin production at the end of 2026. The planned ramp makes the company's plans verifiable within a relatively short window, shifting attention from long-range possibilities to a dated operational step. A start on schedule would speak to Nokia's ability to drive its own expansion, though the growth story would still need continued support from developments in the network business.

Parallel Milestones Would Broaden the Case

AI-RAN sits alongside the optical bet: Nokia expects commercial deployment and first orders in 2027. Should both tracks advance as planned, a second valuation lever would open up beyond optical and IP networking. The most persuasive outcome for investors would be parallel delivery across these projects, provided real business follows — that would widen the base under the positive rating.

Replacing Huawei equipment in Europe is also gaining traction after the investor talks, with additional business possible for Nokia if outstanding financing questions can be settled. Here too, the opportunity comes with conditions attached.

Financing and Timetables Cap the Optimism

The serious counterargument is uncertainty over scope and timing. Nokia calls its growth outlook direction-setting; if it later has to soften that guidance, a key plank of the bullish valuation would come under pressure. In the European replacement market, funding is already an identified obstacle — delayed financial decisions could push project execution back, a particular concern if other announced growth steps slow at the same time.

More distant ventures also warrant caution. Nokia, ICEYE and Ukraine's defence ministry have signed a letter of intent on sovereign satellite communications, with the first telecoms satellites slated to launch in 2028. That could matter over the long haul if intent turns into concrete projects, but near-term valuation should lean on the closer operational steps — limiting the risk of pricing long-range options as secured business.

A Week of Corporate Housekeeping

Alongside the analyst note, Nokia disclosed a 1.5 million euro donation to Aalto University and plans to continue and expand research collaboration there. The planned joint research covers artificial intelligence, 6G, resilient networks and semiconductors, with projects worth roughly 1.3 million euros annually. Shares slipped 2.8% on the day of the announcement.

The company also extended its partnership with One New Zealand, a deal that includes joint R&D work and consulting services. One New Zealand has opted for Nokia's autonomous network solutions, including the Nokia Assurance Center and the Autonomous Networks Data Suite. On Monday, Nokia transferred some 847,000 treasury shares free of charge to participants in its share-based incentive programmes, leaving it with about 80.3 million own shares — a transaction already completed, unlike the donation.

San Jose Is the Next Test

As long as Nokia holds to its announced implementation steps and stands behind the growth outlook, the positive scenario remains intelligible. A weakening growth trajectory or slippage in key projects would force investors to reweight their expectations. The next hard checkpoint is the planned year-end production start in San Jose; after that, attention turns to the AI-RAN commercialisation and the first expected orders in the following year. What matters for the investment decision is whether Nokia hits these milestones and thereby backs today's reaffirmed confidence with operating results.