Nvidia (NVDA) is making a $1 billion equity investment in Nokia Corporation (NOK). The deal, approved by Nokia’s Board of Directors, involves issuing 166.4 million new shares for $6.01 per share, giving Nvidia a 2.9% stake in the Finnish telecom giant. This investment marks a strategic partnership between the two companies to develop AI-powered radio access networks (AI-RAN) and data center networking.
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Following the news, NVDA stock gained over 2% during Tuesday’s regular trading session, and shares of Nokia rallied more than 25%.
The new shares are expected to be registered in November and will trade on Nasdaq Helsinki, Euronext Paris, and the New York Stock Exchange (NYSE). J.P. Morgan (JPM) acted as Nokia’s financial advisor for the transaction.
Nokia plans to use the proceeds to speed up development of 5G and 6G RAN software optimized to run on Nvidia’s AI architecture. The companies will also work on AI networking solutions and integrate Nokia’s data center switching and optical technologies into Nvidia’s AI infrastructure.
It must be noted that T-Mobile U.S. (TMUS) is already working with both companies to integrate AI-RAN into its 6G roadmap. Also, Dell Technologies (DELL) will provide PowerEdge servers to support the new platform.
How the Companies Benefit from This Deal
With this move, Nokia aims to grow its presence in AI and cloud by investing in data-center-friendly networking tools within its infrastructure business.
For Nvidia, the integration of Nokia’s telecom-grade hardware with Nvidia’s software-defined AI platforms could give Nvidia a competitive edge in building low-latency, high-throughput networks, which are essential for training and deploying large AI models.
What Is the Target Price for Nvidia Stock?
On TipRanks, NVDA stock has received a Strong Buy consensus rating, with 35 Buys, one Hold, and one Sell assigned in the last three months. The average Nvidia stock price target is $225, suggesting an upside potential of 15.18% from the current level.
Is NOK a Buy or Sell?
Turning to Wall Street, Nokia stock has a Moderate Buy consensus rating based on six Buys, one Hold, and one Sell assigned over the past three months. Also, the average NOK stock price target of $6.30 suggests a 20.05% downside risk.
