Nokia Transforms into AI Data Center Supplier, Stock Surges Nearly 90% Year-to-Date
Claire Weston
Nokia has left mobile phones behind entirely, repositioning as an AI data-center networking supplier; its stock is up roughly 90% year-to-date. The market is pricing it as an AI infrastructure company — but margins have not yet caught up to that valuation.
What does Nokia actually sell now?
Nokia sells switches, routers, and optical networking gear to data centers — the hardware that lets AI servers talk to each other.
Its customer list includes OpenAI, Meta, and Alphabet, all scaling AI compute aggressively.
This means → Nokia is no longer a phone company. It sells the roads and plumbing that connect the AI factories.
How did it get here?
Former CEO Pekka Lundmark laid the groundwork by acquiring optical-networking firm Infinera for ~$2.3 billion, gaining core optical-transmission tech including lasers, receivers, and chips.
Current CEO Justin Hotard — previously head of Intel's data-center and AI unit — brought in several Silicon Valley executives after taking over, accelerating the AI infrastructure pivot.
In October 2024, Nvidia took a 2.9% stake in Nokia for $1 billion, with a product-collaboration agreement attached. This reflects the chip giant's recognition of Nokia's positioning in the AI networking layer.
How much has market share shifted?
According to consultancy Omdia, Nokia's North American optical-networking share jumped from 6.3% in 2024 to 27.3% in 2025, vaulting it to second place.
The leader is Ciena, at 50.1% share.
In plain terms = Nokia went from a fringe player to number two in a single year — almost entirely on the back of the Infinera acquisition filling out its product line.
What does the guidance tell us?
Nokia's optical-networking unit posted strong first-quarter results; the company then raised its full-year growth guidance to 18%–20%, nearly double the prior level.
Yet mobile-infrastructure still accounts for just over half of total revenue — and that segment keeps shrinking as global carriers wind down 5G rollouts.
This means → Nokia is running with one leg accelerating and one leg slowing. Whether optical growth can offset mobile decline is the next thing to watch.
Where are the risks?
CEO Hotard said in April that lead times on some components are long; the company is working on locking in supply and controlling costs, and expects semiconductor prices to rise.
Omdia analyst Ian Redpath warned: "If lead times become unpredictable, revenue becomes unstable too."
In plain terms = supply chain is the biggest uncertainty in this business. The orders are there — whether Nokia can deliver on time, and at what cost, is still an open question.
Can the valuation hold?
Recon Analytics analyst Daryl Schoolar said Nokia's stock is "basking in the AI halo," but its momentum "depends on AI itself succeeding — and that is not 100% guaranteed."
Energy Group Capital research head Amanda Lyons noted that Nokia is already valued like an AI company, but its margins have not reached the level the market expects from one.
This means → the market gave Nokia an AI price tag first; now it is waiting for AI-level profits. If earnings cannot catch up to the story, the valuation will come back down.
Content is for reference only, not financial advice.