Nokia Weighs External Lasers for Data Centres as Moody's Lifts It Back to Investment Grade

Nokia is sounding out a push deeper into the optical plumbing of data centres, with a manager confirming the company is still weighing how far into the hardware stack it wants to go. Rob Shore said no decision has been reached and that several technical routes remain under review, including optical components placed directly on or close to the chip — known as near-packaged and co-packaged optics — as well as the supply of external lasers, which would see Nokia provide a different piece of the optical transmission chain.

The deliberations amount to a menu of engineering options rather than a settled product line, and the Finnish vendor has not committed to any of them. The strategic logic, though, is plain: cloud and AI build-outs are driving demand for exactly the kind of high-speed optical links that sit between and inside servers.

That same demand cycle has just won Nokia a vote of confidence from the credit market. Moody's Ratings upgraded the company's long-term issuer rating and its senior unsecured debt rating from Ba1 to Baa3, restoring an investment-grade standing, and kept the outlook positive. The upgrade did not, however, shield the shares from the sector-wide swings that followed.

A 2035 Traffic Map Heavy on AI

Nokia's own forecast, published on 4 November, sketches the scale of the opportunity it is chasing. The company expects artificial intelligence to account for 44% of global data traffic by 2035, with total monthly volume climbing to almost 3,789 exabytes by then.

Growth of that magnitude, Nokia argues, will force structural changes on network infrastructure, as traffic surges from users into the network and latency requirements tighten. The heaviest lifting comes from autonomous AI agents: Nokia projects their data traffic will rise roughly 160-fold by 2035, while traffic from physical AI applications is seen increasing 105-fold over the same period. In a separate summary of the findings, the company framed AI's share of worldwide network traffic as close to half by that date.

Hotwire Build Slated for Early 2027

On the order front, Hotwire Communications has picked Nokia to construct a next-generation network in North Carolina designed to be ready for AI-era architectures. The deployment will lean on Nokia's 7750 Service Router, which combines IP routing with optical functions, and is expected to go live in early 2027.

Trading in the stock has been choppy around all of this. A broad selloff in optical communications weighed on Nokia on Thursday, a move media reports tied to industry-wide pressure rather than any fresh company-specific announcement, with worries about the pace of AI investment feeding the wider retreat. The shares subsequently recovered alongside technology stocks following the prior week's slump — a rebound that the improved credit rating did nothing to prevent, according to the reports.