Key Takeaways
- Bank of America raised Nokia’s rating to Buy from Neutral, increasing the price target from €6.87 to €10.70.
- Shares of Nokia climbed approximately 2% in Helsinki markets after the upgrade was announced.
- The positive outlook centers on Nokia’s expanding optical networking operations and surging AI data center requirements.
- Bank of America projects Nokia’s Optical Networks division will achieve 17% compound annual growth through 2028.
- The firm’s earnings estimates for 2026–2028 exceed consensus forecasts by 13–15%.
Shares of Nokia posted gains on Monday following a significant upgrade from Bank of America, which elevated the Finnish telecommunications equipment manufacturer to Buy status, highlighting the company’s expanding optical networking operations and increasing demand from cloud providers constructing AI-focused infrastructure.
The upgrade came from BofA analyst Oliver Wong, who raised the price objective from €6.87 to €10.70 — representing a substantial 56% increase. By midday GMT in Helsinki, Nokia’s shares had advanced nearly 2%.
Bank of America also revised its valuation approach, transitioning from an EV/EBITDA framework to a sum-of-the-parts methodology. The new model assigns a 30x multiple to Nokia’s 2027 estimated EBIT for its Optical and IP Networks operations, while applying a 10x multiple to the company’s remaining divisions.
The 2025 Infinera acquisition plays a pivotal role in BofA’s investment case. This transaction expanded Nokia’s reach into the U.S. cloud provider market, and the bank considers it a strategic inflection point for the company’s competitive stance.
Bank of America anticipates Nokia’s Optical Networks division will expand at a 17% compound annual growth rate through 2028. This projection is underpinned by increasing demand for optical systems and an anticipated acceleration in coherent pluggable revenues as the sector transitions from 400G to 800G transmission speeds.
Wong’s research team characterized Nokia as “transforming into an optical powerhouse with a European advantage.” They believe the company’s own 10–12% growth projection for its Optical and IP Networks business is understated, anticipating Nokia will exceed and revise upward these targets.
IP Networks Expansion and European Data Center Push
Regarding IP Networks, Bank of America expects Nokia to gain market share in European data center switching infrastructure, bolstered by its alliance with NScale, a neocloud provider concentrating on European markets.
The investment bank projects Nokia could generate €226 million in data center switching sales during 2026, escalating to €407 million by 2028.
Mobile Infrastructure continues to represent Nokia’s primary revenue stream. BofA anticipates operating margins in this segment will climb from 13.4% in 2025 to 17.8% by 2028, fueled by portfolio optimization and increased emphasis on software solutions.
Nvidia Collaboration and Potential Huawei Displacement
Nokia’s strategic collaboration with Nvidia provides an additional growth dimension. Nvidia committed $1 billion to Nokia in October 2025, targeting AI-RAN applications. While BofA hasn’t incorporated significant near-term revenue from this partnership into its models, the firm views it as a substantial long-term catalyst.
Similarly, the potential displacement of Huawei and ZTE infrastructure throughout Europe isn’t factored into BofA’s baseline projections — though it represents considerable upside potential should regulatory or geopolitical pressures intensify, prompting European carriers to shift away from Chinese equipment suppliers.
Bank of America’s earnings per share projections for 2026–2028 stand 13–15% above consensus Wall Street estimates. This variance indicates the market may not have fully appreciated Nokia’s strategic shift toward optical networking, according to BofA’s assessment.
Jefferies maintains a Buy recommendation on Nokia as well, with a price target of €8.80, established in an April 8 research note.
