Artificial intelligence (AI) is rapidly reshaping industries far beyond data centers, and telecommunications is emerging as one of the next major frontiers. As mobile networks become increasingly complex and AI-driven applications consume more bandwidth, carriers are searching for ways to boost network capacity without spending billions on additional spectrum or infrastructure.
That's where Nokia (NOK) is looking to gain an edge. The Finnish telecom giant has unveiled the industry's first commercial AI-native radio access network (AI-RAN) platform in partnership with Nvidia (NVDA), marking a major step toward bringing AI directly into wireless network infrastructure. The companies believe the technology could eventually double the efficiency of existing spectrum while laying the groundwork for AI-powered services and future 6G networks.
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Is Nokia Stock Expensive After Its Massive Rally?
Even after retreating about 41% from its June 52-week high, NOK stock remains up about 60% year-to-date (YTD) and more than 117% over the past 12 months. Investors initially shrugged off the announcement, but the partnership shows Nokia's ambition to evolve beyond traditional telecom equipment into a higher-margin AI software and infrastructure business.
However, Nokia's AI transformation has come with a much richer valuation.
The stock currently trades at roughly 71x to 80x trailing earnings, well above the communications equipment industry median near 32x. On a forward basis, Nokia changes hands at approximately 37x earnings versus an industry average closer to 24x.
At first glance, those multiples appear demanding. However, investors are increasingly valuing Nokia as an AI infrastructure company rather than a mature telecom equipment vendor. If management successfully expands its software, AI, and hyperscaler businesses, this premium valuation could prove more sustainable than traditional telecom metrics suggest.
www.barchart.com Nokia's AI-RAN Platform Could Be a Long-Term Growth Driver
The new AI-native RAN platform combines Nokia's anyRAN software with Nvidia's Aerial AI-RAN technology to help wireless operators run AI workloads alongside traditional network traffic on the same infrastructure.
The companies expect the platform to deliver more than 100% spectral efficiency gains by 2028, effectively doubling network capacity without requiring additional spectrum. Pilot deployments are scheduled for late 2026, while broader commercial availability is expected in 2027.
The launch also supports Nokia's transition toward software-driven recurring revenue instead of relying primarily on networking hardware sales. As AI adoption accelerates and telecom operators prepare for 6G networks, the partnership could open another meaningful growth avenue for Nokia over the coming years.
Nokia Quarterly Results Show Improving Fundamentals
Nokia delivered encouraging first-quarter 2026 results that reinforced management's AI growth strategy.
Net sales increased 4% year-over-year (YoY) to €4.5 billion, while gross margin expanded 320 basis points to 45.5%. Comparable operating profit climbed to €281 million, with operating margin improving to 6.2%.
Net income surged 245% YoY to €86 million, while adjusted earnings came in at €0.05 per share, ahead of analyst expectations of €0.04. The company also generated €629 million in free cash flow and ended the quarter with a strong net cash position of €3.8 billion.
Management highlighted that AI and cloud customers grew 49% YoY during the quarter, helping drive 20% growth in Optical Networks revenue. Nokia also raised its 2026 Network Infrastructure growth outlook to 12% to 14%, while increasing Optical and IP Networks guidance to 18% to 20%.
Investors will receive another important update when the company reports second-quarter earnings on July 23.
Wall Street Remains Largely Bullish on NOK Stock
Several major Wall Street firms continue to see further upside despite Nokia's strong performance over the past year.
Morgan Stanley recently named NOK stock its top telecom pick and lifted its price target to €14, citing accelerating AI infrastructure demand. J.P. Morgan and Bank of America have also raised their price targets following Nokia's improving AI and cloud positioning, while Jefferies remains bullish on the networking company.
Not everyone is convinced, however. DNB Carnegie recently downgraded Nokia to “Sell,” while Goldman Sachs maintains a “Hold” rating, arguing much of the AI optimism may already be reflected in the current valuation.
Even so, the broader Wall Street consensus remains constructive, with analysts maintaining a “Moderate Buy” consensus rating and mean price target of $16, forecasting meaningful upside of more than 45% from current trading levels if Nokia continues executing on its AI strategy.
www.barchart.com On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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