Nokia's share price is currently around $16.8, having accumulated an increase of nearly 170% since Nvidia's subscription to new shares at $6.01 in October 2025. Its market capitalization has increased by approximately $60 billion, reaching a 16-year high. The market no longer views it merely as a cyclical telecom equipment supplier but is rapidly re-rating it as an AI network and edge infrastructure player. Nvidia's equity investment and technical collaboration have been the most direct catalyst.
Behind this is the major trend of AI capital expenditure shifting from core data centers to the telecom edge, wireless access networks, and optical networks. The question is, how far has this re-rating progressed, and how much support can future actual implementation provide for the stock price?
Nokia's Stock Price Has Completed the AI Infrastructure Re-rating
Since Nvidia announced a $1 billion equity investment and reached an AI-RAN strategic cooperation agreement in October 2025, Nokia's share price has accumulated gains of nearly 170%. Year-to-date in 2026, the increase exceeds 140%, rising from around $6.5 to a peak of $15.78 in May, and fluctuating in the $16.25-$16.85 range in early June. Following the Q1 earnings release, it once hit a 16-year high.
The current market capitalization is approximately $85-94 billion, an increase of about $60 billion from pre-investment. The AI&Cloud business accounts for about 8% of group sales but contributes the majority of the incremental value. The trailing twelve-month P/E ratio is close to 100 times, while the forward P/E ratio is about 42 times, significantly higher than traditional telecom peers but still lower than pure-play AI infrastructure companies. In contrast, Ericsson's share price performance lags due to its choice of a more independent ASIC chip strategy.
These changes indicate that the market is already trading on Nokia's transformation from a "forgotten telecom stock" to an AI infrastructure participant. Nvidia holds approximately 3% of the shares, providing both technical endorsement and partially aligning interests. Coupled with the narrative of the U.S. pushing to regain leadership in the telecom field, this has collectively accelerated this round of re-rating.
However, after significantly outperforming, what actual business progress is the market truly trading on?
Q1 Orders and Guidance Raise Validate Accelerated Transformation
In the Q1 2026 earnings report, Nokia's AI&Cloud net sales increased by 49% year-over-year, securing €1 billion in new orders, with comparable operating profit surging by 54%. Consequently, the company raised its expected annual compound growth rate for the AI&Cloud addressable market from 16% to 27% for 2025-2028, and its full-year growth guidance for network infrastructure from 6-8% to 12-14%.
Optical network business grew by 20% during the same period, becoming a key part of connecting hyperscaler AI data centers. This capability was further strengthened following the acquisition of Infinera. New order intake is strong, free cash flow reached €629 million, and the net cash position is ample, providing a buffer for future execution.
These figures indicate that the cooperation with Nvidia is shifting from an equity story to visible revenue acceleration. Although AI&Cloud still represents a low proportion, its incremental contribution is prominent. The company's raised full-year guidance reflects management's confidence in sustained strong demand. Institutions have been net buyers over the past 12 months, and call option activity is higher than normal levels, further supporting this assessment.
MWC Tests and Innovation Lab Confirm Early Commercial Pathway
During MWC 2026, Nokia completed functional tests and over-the-air upgrade trials with operators like T-Mobile, SoftBank, and Indosat. At T-Mobile's AI-RAN Innovation Center, they used Nokia's AirScale Massive MIMO radio equipment alongside Nvidia Grace Hopper servers, successfully running AI workloads concurrently with RAN (Radio Access Network) tasks, supporting practical use cases like video streaming and generative AI queries.
In May 2026, Nokia opened the AI Networking Innovation Lab in Sunnyvale, California, collaborating with partners like AMD, Lenovo, Supermicro, and Keysight to develop next-generation AI data center networks. Concurrently, it introduced AI agent features for fixed broadband products, helping operators diagnose problems automatically, reduce costs, and accelerate fiber deployment.
These developments show that the acceleration path for Nokia's anyRAN software on Nvidia GPU platforms is now implementable. AI-RAN (using AI to optimize wireless access networks) is no longer just a concept but can deliver real-time optimization, reduce energy consumption, and generate new edge services within actual operator networks, providing a viable path for the transition from 5G-Advanced to 6G. Nokia CEO Justin Hotard stated that the cooperation is moving from validation to early commercial deployment.
Simply put, Nokia is applying Nvidia GPUs to traditional wireless network hardware, enabling AI computing and network transmission tasks to run in parallel. This allows for real-time network adjustments, saves power, and facilitates the development of new services. This approach turns general-purpose equipment into smarter edge infrastructure.
Deployment Scale Becomes the Biggest Constraint Under High Valuation
Although Q1 data, test results, and ecosystem partner expansion are relatively positive, the current P/E ratio is close to 100 times. Analyst consensus target prices are around €9.4-€12 (some investment banks have raised to around €12-€14), significantly lagging the current stock price. This indicates that the market has already priced in considerable optimism for long-term AI-RAN penetration and the 27% growth expectation, leaving a significantly compressed margin for error.
Over the next 12-24 months, the conversion speed of actual deployment contracts from major operators, the overall pace of AI capital expenditure, and differences in approach compared to Ericsson (which insists on independent ASICs, avoiding deep ties to a single GPU supplier) will become the core variables. If subsequent orders fall short of expectations or AI spending slows, the risk of a pullback will significantly increase.
Institutional net buying and bullish option preferences currently still support share price momentum, but these ultimately need to be validated by execution. Nokia's position as a representative AI edge infrastructure player has gained recognition, and the combination of optical networks with wireless access networks expands the overall market opportunity. However, there is a noticeable distance from current early orders to truly commercial deployment at hyperscaler scale.
It is still in the early acceleration phase, with overall execution signals being positive. However, the high valuation has already tightened the margin for error considerably. Investors should focus next on actual large-scale deployment progress rather than new demonstrations to gauge how much further this trend of AI expanding to the telecom edge can go.
