Nokia Corporation NOK and Viavi Solutions Inc. VIAV both operate in communications networking infrastructure and are benefiting from growing investment in AI-driven data center and optical networking. The communication network industry is entering a different phase, as the growing proliferation of AI data centers and AI workloads is driving demand for next-generation networking architecture.
The industry's transition toward 400G and 800G networking technologies is driving demand for manufacturers and vendors of optical transport equipment and connectivity solutions. Growing network complexity is also increasing the need for advanced testing to support performance and reliability.
Both Nokia and Viavi operate in different parts of the broader AI networking system. Let us analyze in depth the competitive strengths and weaknesses of the companies to understand who is in a better position to maximize gains from the emerging market trends.
The Case for Nokia
Nokia is increasingly emerging as an AI infrastructure beneficiary rather than a traditional telecom-equipment vendor. The growth is primarily supported by growing hyperscalers’ investment in AI infrastructure. AI-driven spending is primarily driving growth in Nokia’s Network Infrastructure segment. The segment’s Optical Networks business revenues grew 20% year over year on a constant-currency basis, driven by rapid AI data center buildouts. In this vertical, Nokia reported strong order intake backed by solid demand for optical pluggables, line systems and data-center interconnect solutions.
Recently, Orange Belgium has selected Nokia to modernize its optical transport infrastructure, underscoring the growing demand for AI-ready networking solutions. Under the multi-year agreement, Nokia will deploy its 1830 Photonic Service Switch (PSS) platform and AI-powered WaveSuite automation software. The solution will unify Orange Belgium's fixed and mobile transport networks into a single converged optical backbone. Such a deal underscores Nokia’s growing credibility in this market. Backed by such solid momentum, the company also increased its forecast for Network Infrastructure market growth to 14% CAGR from the previously expected 9%.
However, it is to be noted that despite growth in its AI and cloud business, Nokia still derives the majority of its revenues from the legacy telecom business. Only 8% of the total net sales came from AI and cloud in the first quarter. In this market, Nokia faces competition from major players such as Arista Networks Inc. ANET and Cisco. Arista’s Ethernet-based AI fabrics are gaining traction as customers increasingly move away from proprietary networking architectures. It has deployed more than 100 customer networks running 800G Ethernet. Arista is also set to benefit from 1.6T networking adoption from the beginning of 2027.
The company also faces stiff competition from Ericsson ERIC across mobile network infrastructure, radio access networks (RAN), core networks and 5G deployments. Ericsson boasts a comprehensive portfolio of 60,000 granted patents. A highly-skilled team makes this possible while the close collaboration with customers ensures quick uptake, driving sustainable growth. Around 50% of the world’s mobile 5G traffic runs on Ericsson’s radio networks.
The Case for Viavi
AI data center buildout is Viavi’s strongest growth engine. In every stage of AI hardware development, from designing chips to manufacturing optical interconnects and deploying data centers, Viavi offers test and measurement solutions. Backed by its comprehensive product offering, the company is seeing robust demand from hyperscalers, semiconductor companies, optical module manufacturers and networking equipment vendors.
The industry is rapidly moving from 400G to 800G Ethernet and now toward 1.6-terabit. Each speed upgrade requires validation and protocol testing solutions. This transition to higher-speed optical networks presents a solid growth opportunity for VIAV.
Recent investments in PCIe 7.0 analysis capabilities and the launch of the CyberFlood CF1000 platform expand Viavi’s ability to validate AI inference workloads, encrypted traffic and next-generation data center infrastructure. These developments strengthen exposure to long-term AI-related network testing demand, and support continued growth in lab, production and field-testing solutions. The company has also introduced the industry’s first Ultra Ethernet Transport validation platform, designed to help hyperscalers, cloud providers, neocloud operators, and network equipment manufacturers accelerate the deployment of next-generation AI networks. Such innovative product launches bode well for sustainable growth.
Viavi's aerospace and defense business continues to deliver strong growth, driven by positioning, navigation and timing (PNT) products acquired through Inertial Labs. This shows the resilience in Viavi’s business model, which does not rely on a single market to sustain growth.
During the third quarter of 2026, the company’s non-GAAP gross profit improved to $252.9 million from $170.8 million a year ago, with respective margins of 62.2% and 60%. Non-GAAP operating income was $85.5 million compared with $47.7 million in the year-ago quarter. Better product mix, higher AI-related revenues and improving efficiency are boosting margins.
How Do Zacks Estimates Compare for VIAV & NOK?
The Zacks Consensus Estimate for VIAV’s 2026 sales implies year-over-year growth of 39.09%, while that for EPS suggests growth of 97.87%. The EPS estimate for 2026 has remained unchanged over the past 60 days.
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The Zacks Consensus Estimate for NOK’s 2026 sales implies year-over-year growth of 6.18%, while that for EPS suggests an increase of 21.21%. The EPS estimate for 2026 has remained unchanged over the past 60 days.
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Price Performance & Valuation of VIAV & NOK
Over the past year, Viavi has gained 290.8%, while NOK has gained 130.1% over the same period.
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Nokia looks more attractive than Viavi from a valuation standpoint. Going by the price/earnings ratio, NOK’s shares currently trade at 26.58 forward earnings, lower than 32.8 for VIAV.
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VIAV or NOK: Which is a Better Pick?
Viavi carries a Zacks Rank #2 (Buy), while Nokia carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Viavi and Nokia are both rapidly expanding their portfolio offerings to capitalize on the emerging AI infrastructure market. However, Nokia’s venture into the AI networking space is plagued by strong competition from other major players such as Arista, HPE and Cisco. Gaining a competitive edge against these AI networking giants will be challenging. Consequently, Viavi boasts a strong position in the testing and validation solutions that cater to AI infrastructure buildout. Transition to high-speed optical networks is also a growth catalyst for VIAV. Moreover, Viavi’s presence in diverse markets such as aerospace, defense and semiconductor improves resilience in its business model. Owing to these factors and a better Zacks Rank, Viavi is a better investment option at present.
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This article originally published on Zacks Investment Research (zacks.com).