- Nokia shares dropped 5% in Helsinki trading after a two-day 40% surge driven by excitement over the Nvidia deal
- Nvidia is paying $1 billion to acquire 2.9% of Nokia as part of an AI-focused telecommunications partnership
- Analysts caution investors that the stock rally has outpaced realistic expectations for near-term financial benefits
- Revenue generation from the partnership is projected to start in 2027 with 5G deployment followed by 6G
- The deal positions Nvidia as Nokia’s second-largest shareholder with focus on AI-powered radio networks
Nokia experienced a sharp reversal on Thursday. The stock fell 5% in Helsinki after climbing more than 40% over the previous two trading sessions.
The sell-off came days after Nokia unveiled a major partnership with Nvidia. The chip giant is investing $1 billion to take a 2.9% ownership stake in the Finnish telecommunications company.
Investor enthusiasm initially drove Nokia to its strongest price level in almost a decade. Tuesday’s session closed with a 20.86% gain, marking the highest valuation since early 2016.
Nvidia agreed to purchase 166,389,351 new Nokia shares at $6.01 apiece. This transaction elevates Nvidia to become Nokia’s second-biggest shareholder.
AI Technology at the Core
The partnership zeroes in on artificial intelligence applications for telecommunications infrastructure. Nokia aims to embed its data center communication products within Nvidia’s growing AI ecosystem.
Jensen Huang, Nvidia’s CEO, framed the arrangement as pivotal for American leadership in emerging 6G wireless standards. He praised the collaboration for returning telecommunications innovation to the United States.
Justin Hotard, Nokia’s CEO, anticipates the first revenue streams appearing in 2027. Initial commercial launches will feature 5G technology before progressing to 6G implementations.
“This represents American technology providing fundamental capabilities,” Hotard told reporters. Nvidia’s computing infrastructure has been customized specifically for mobile network applications.
Hotard joined Nokia this past April from his previous role heading Intel’s data center and AI operations. He’s made expanding data center business a top priority.
Nvidia’s AI Aerial platform forms the backbone of the 6G wireless architecture. Collaborating organizations include ODC providing 5G RAN software, Cisco supplying network functions, and MITRE alongside Booz Allen developing 6G applications.
Analyst Skepticism Grows
Market analysts are pumping the brakes despite initial investor excitement. Kepler Cheuvreux noted the deal shows promise but raised questions about practical implementation.
Revenue forecasts remain murky for the medium term given ongoing weakness in the RAN equipment market. Competition threatens to intensify over coming years, potentially from Nvidia entering as a direct competitor.
“The share price rally has been excessive,” wrote Kepler Cheuvreux researchers. They argue current stock prices already reflect partnership benefits that haven’t been verified.
Meaningful financial contributions could take considerable time to appear. Nokia must prove it can effectively integrate Nvidia’s technology into products customers will actually purchase.
Industry forecasts predict data center infrastructure investment will top $1.7 trillion by decade’s end. Artificial intelligence expansion accounts for most of this anticipated spending, according to McKinsey.
Nokia and Nvidia also announced a three-way collaboration with T-Mobile U.S. focusing on AI radio technology. Testing for 6G capabilities begins in 2026.
Both companies maintain freedom to work with other partners. Nokia currently relies on Marvell for chip supplies across numerous products while facing competition from Ericsson in data center markets.
