Nokia Oyj (NOK) confirms its transformation into a leading artificial intelligence (AI) native network infrastructure provider for the 6G era. Anchored by Nvidia’s (NVDA) $1 billion strategic equity investment and its role in shaping AI-native standards, Nokia is positioned to help define how 6G is built globally. Despite a price increase of over 55% in the past year, I am still bullish on NOK stock because the underlying business increasingly reflects a focused, higher-margin infrastructure leader at the center of the AI and 6G supercycle.
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The Finnish telecommunications company, which provides mobile, fixed, and cloud network solutions worldwide, is no longer just a hardware provider. Instead, Nokia is now en route to becoming an essential architect of Artificial Intelligence-Radio Access Network (AI-RAN), leveraging deep-learning algorithms to optimize radio access networks. Thus, investors who pivot away from pricing NOK stock like a legacy telecom vendor will likely find themselves well rewarded.
Nokia’s AI Network Pivot Is Real, Not Hype
Nokia ended 2025 with net sales of €19.9 billion, which is approximately $22.97 billion, and comparable operating profit of €2 billion, corresponding to about $2.31 billion. Additionally, it generated €1.5 billion, or approximately $1.73 billion in free cash flow (FCF). Overall, these metrics validated solid execution in a cyclical, capex-constrained market. What makes this performance even more compelling is where Nokia is steering the business.
By reorganizing into two primary segments, that is, Network Infrastructure and Mobile Infrastructure, the company aims to position itself as a leader in network transformation in the AI era. The strategic tilt is already becoming visible in the results. Network Infrastructure revenue is targeted to grow at 6–8% annually, with Internet Protocol (IP) and optical networks projected to grow at 10–12%, roughly double the pace of the broader segment. In Q4 2025, Optical Networks delivered a standout 17% year-over-year increase, driven by AI and cloud customers.
The book-to-bill ratio above one confirms order momentum well into 2026. As AI workloads force hyperscalers and enterprises to upgrade optical backbones and IP routing, Nokia’s revenue mix is structurally shifting toward higher-growth, higher-margin segments.
Looking ahead, management has guided 2026 comparable operating profit of €2–2.5 billion or roughly $2.31–2.89 billion, with a view to expanding optical manufacturing capacity. The destination for Nokia is clear: management targets €2.7–3.2 billion, approximately $3.12–3.69 billion in comparable operating profit by 2028. This is significant earnings leverage from today’s €2 billion base, or nearly $2.31 billion, and a compelling compounding opportunity for long-term investors who potentially buy the dips.
The Nvidia Partnership Catalyzes Nokia’s AI-RAN Advantage
Nvidia’s $1 billion equity stake in Nokia, acquired at $6.01 per share and giving it approximately 3% of the company, is the clearest external validation of Nokia’s AI pivot. Nvidia picked Nokia as the partner to embed graphics processing unit (GPU)-based AI inference directly into radio access networks at scale. The aim is to target private 5G networks, hyperscaler connectivity, and ultimately 6G. When the world’s leading AI hardware company backs that choice, the market should take notice.
Recently, Nokia has also joined a landmark coalition led by Nvidia, alongside Telefonaktiebolaget LM Ericsson (ERIC), T-Mobile US (TMUS), and Deutsche Telekom (DTEGY). Their mandate is that 6G infrastructure must be open, intelligent, and secure, with AI embedded as a core component from the ground up rather than added as an afterthought. In other words, Nokia is co-writing the 6G specifications that competitors will have to meet.
Nokia CEO Justin Hotard, who assumed the helm in April 2025 after leading Intel’s (INTC) Data Center & AI Group, has been unambiguous: Nokia will connect intelligence the way it once connected people. That mandate is backed by a $4 billion pledge to U.S. manufacturing and R&D for AI-ready network connectivity. This distinguishes Nokia from vendors merely licensing the AI narrative and positions it as a structural participant in the buildout.
What the Numbers Reveal
At present, the longer-term numbers tell a more compelling story. Nokia trades at a forward P/E of 22.6x with a net cash position of €3.4 billion, which is about $3.92 billion, and has a beta of 0.4. In addition, its Nokia Technologies patent licensing business generates approximately €1.4 billion, roughly $1.62 billion in annual net sales under long-term contracts, providing a steady, high-margin profit floor.
Beyond potential capital appreciation, Nokia’s dividend yield is approximately 2.3%, well above the technology sector average of 1.1%. Its payout ratio of about 43.5% leaves clear capacity for dividend growth as earnings scale toward the 2028 targets.
Investors seeking additional yield can also sell covered calls against their NOK position. For example, the July 2026 $9 strike call option, currently bid at approximately $0.55 per share, lowers the effective cost basis to approximately $7.40 if the stock remains below the strike at expiry. Income and growth, at a defensive beta, provide a rare combination in the AI infrastructure space.
Is NOK Stock a Buy, Sell, or Hold?
According to Wall Street analysts, Nokia currently carries a Moderate Buy consensus rating, based on seven analyst ratings assigned in the past three months, consisting of five Buys, one Hold, and one Sell. The average 12-month price target for $NOK is $7.30, with a high forecast of $8.50. In other words, the Street suggests that NOK stock’s recent rally has outpaced near-term consensus expectations. However, the bull case here is a 2028 growth-and-compounding story.
Conclusion
Nokia Oyj is a credible AI infrastructure investment that the market is still mispricing as a legacy telecom vendor. The Nvidia partnership, its central role in co-writing global 6G standards, the two-segment restructuring designed to capture the AI and optical growth cycle, and a clear path to higher operating profit by 2028 collectively make the bull case. The 2.3% dividend yield, annual patent licensing income under long-term contracts, and a beta of 0.4 provide the defensive ballast that makes NOK suitable for long-term holders rather than short-term traders.
The strategy is straightforward: buy the dips, collect the dividend, and let the 2028 targets do the work.