The telecom space is going through major changes, as 5G, Open RAN, and data center AI all seek to push network revenue up. Global 5G connections reached 2.8 billion in Q3 2025, with 162 million added in that quarter alone, while the Open RAN market is now worth around 6.5 billion. At the same time, copper wiring is hitting its physical limits within AI data centers, making the optical network more important as data traffic continues to increase.
Nokia (NOK) is at the center of that story. On April 13, the stock rose to a 52-week high of $10.48, extending its rally after Bank of America analyst Oliver Wong upgraded the stock from “Neutral” to “Buy” and called Infinera’s $2.3 billion Nokia deal a major shift in its telecommunications business.
Also, Wong said Nokia’s light networks segment could grow at a CAGR of 17% until 2028, and said the market still hasn’t fully priced in the company’s $1 billion Nvidia ( NVDA ) AI-RAN partnership.
However, the easy rise may not be apparent now. Nokia trades at 24.5 times earnings, the stock is up nearly 71% from its 2026 low, and momentum is already pushing it into overbought territory. So the real question is simple: is this the start of a big rally, or are investors showing up after most of the run has already happened?
Nokia is now a network and infrastructure company, not a phone maker. It makes its money through mobile networks, fixed and IP networks, cloud and network services, and proprietary licensing.
Over the past 12 months, the stock is up 107.83%, and has gained 59.97% so far this year, which helps explain why it now trades at a forward P/E of 24.51 times compared to about 22.46 times for the sector.
There is also a small income angle. It paid a dividend of 1.14% per share last term and an annual yield of 0.024%.
Q4 2025 was steady rather than spectacular. Net sales came in at €6.125 billion ($6.7 billion), up 2% year-on-year (YOY), or €6.130 billion ($6.7 billion) comparatively, with 3% growth in constant currency. The reported gross margin was 44.9%, down 120 points, but comparatively improved to 48.1%, up 90 points.
Reported operating profit fell 37% to €540 million ($592 million), for a margin of 8.8%, while comparable operating profit fell 3% to €1.058 billion ($1.16 billion), for a 17.3% margin. Reported diluted EPS was €0.10 ($0.11) and comparable EPS was €0.16 ($0.18), down 33% and 11%, respectively. Still, free cash flow was good at 226 million euros ($248 million), and Nokia ended the quarter with 3.378 billion euros ($3.70 billion) in net cash and interest-bearing investments and 6.791 billion euros ($7.43 billion) in net income. and investment.
Nokia’s next phase of growth is heavily tied to its push into AI-RAN and next-generation network equipment. Nvidia is putting $1 billion behind that effort, with the two companies teaming up to support the transition from 5G to 6G. That partnership includes Nvidia’s new Arc Aerial RAN Computing, built for future telecom workloads, while Nokia is using that platform to roll out new AI-RAN products. IT-Mobile US ( TMUS ) is already working with both companies to bring this technology to its 6G development, and Dell ( DELL ) PowerEdge servers are part of the setup.
Nokia furthered Nvidia’s partnership with new customer integration and successful testing of any RAN software on Nvidia’s GPU-based AI-RAN platform with T-Mobile, Indosat, and SoftBank Group (SFTBY). Interest is also found in BT (BTGOF), Elisa (ELMUY), NTT DOCOMO, and Vodafone Group (VOD), with support from Dell Technologies, Quanta (PWR), Red Hat, and SuperMicro (SMCI), as Nokia tries to position itself at the center of building and operating wireless networks in the next few years.
On the optical side, Nokia is following the growing demand for faster and more efficient network capacity. It has launched a new group of optical products designed for AI-driven networks, and the company says it can reduce total cost of ownership by up to 70%. The range includes pluggable 1.6T, 2.4T, and 3.2T transponders for everything from campus and metro networks to long-haul and subsea links. These products are expected to begin sampling in mid-2027, with general availability in the second half of 2027.
Nokia’s next test comes on April 23, when it reports earnings before the market opens. Wall Street expects EPS of $0.06 for the March quarter, up from $0.03 last year, and $0.08 for the June quarter, up from $0.05. For the full year, analysts see earnings reaching $0.40 in 2026 from $0.33. In other words, the road is still expecting strong growth from here.
That helps explain why Morgan Stanley is sitting on the stock. Even before Bank of America’s Oliver Wong helped spark Monday’s rally, Morgan Stanley analyst Terence Tsui had already named Nokia as one of the company’s Top Picks for 2026.
He upgraded the stock to “overweight” in mid-January and later raised his target twice, most recently to €8.50 ($9.32) in March, which was the highest on the Street at the time. His case was based on a strong foundation linked to AI and cloud infrastructure, a combination of better revenue, and strong results from peers across the industry.
On the downside, of the 18 analysts surveyed, nine rated it a “Strong Buy,” two called it a “Neutral Buy,” five called it a “Hold,” and the remaining two rated it a “Strong Sell.” The current stock price exceeded the average price target of $8.35. The problem is that the stock is already trading at $10.35, which puts it about 19% above the target price.
At this point, Nokia looks like a “Hold” rather than a new buy for 52 weeks. AI-RAN and real optical tailwinds, the Nvidia agreement and the acquisition of Infinera give you real power in the construction of AI and 6G, and the income is finally increasing significantly. But with the stock up more than 100% for the year, trading at rich valuations, and sitting about 25% above the Street target, most of that story is already priced in. From here, the risk reward turns to cooling or drifting to the sides unless the Nokias are constantly hitting and climbing.
At the date of publication, Ebube Jones did not have (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
