NOK Stock Rises Overnight: Analyst Calls Nokia AI Optical Dark Horse Trading At 'Conservative Valuation'

Nokia’s optical networking business is gaining traction with AI and cloud customers, along with strong retail interest.

• Rosenblatt initiated coverage of Nokia with a Buy rating and a $15 price target, implying 55% upside. 
• The firm sees Nokia benefiting from its growing optical networking business and scale-across technology. 
• Rosenblatt called Nokia an “AI optical powerhouse” valued like a traditional telecom company. 

Nokia Corp. (NOK) stock rose overnight after Rosenblatt initiated coverage with a ‘Buy’ rating, calling the telecom equipment maker an AI optical “Powerhouse” trading at a potentially conservative valuation. The firm sees Nokia benefiting from growing AI infrastructure demand as its business mix shifts toward AI. 

Nokia stock traded over 1% higher overnight after a more than 13% decline in regular session, logging its worst day since June.

Rosenblat Lauds Nokia’s AI Infrastructure Positioning

Rosenblatt started coverage on the telecom equipment maker at Buy and set a $15 price target, implying a 55% upside to the stock’s last closing price. The firm believes Nokia is better positioned for AI infrastructure expansion than investors currently recognize. Rosenblatt highlighted the company’s growing role in optical networking, particularly in an infrastructure layer that can be difficult for customers to replace once deployed.

According to the analyst, Nokia has captured meaningful business in scale-across, one of three optical networking fabrics. Rosenblatt considers that segment especially valuable because equipment embedded into network designs can be challenging to swap out later.

Scale-across networking is a specialized data center interconnect approach that links geographically separated AI compute clusters over wide-area networks (WANs) to function as a single logical super-cluster. Rosenblatt explained that this gives Nokia an advantage as data-center operators and other customers expand infrastructure to support AI workloads and as AI-related spending takes a larger share of Nokia’s overall business.

Nokia’s Valuation Could Have Room To Rise

Rosenblatt's $15 valuation assumes Nokia currently gets roughly one-third of its infrastructure exposure from AI and the remaining two-thirds from telecom. The analyst believes that mix could change substantially as AI investment stays high.

The firm says its price target is thus “potentially conservative” and that Nokia’s consistent shift towards AI could leave room for more. Nokia is a "powerhouse AI optical franchise trading at a telco multiple."

In the fiscal second quarter (Q2), Nokia’s Network Infrastructure sales rose 12% year-on-year, driven by 20% growth in Optical Networks to €868 million ($1 billion) and 16% growth in IP Networks. Sales to AI and cloud customers more than doubled, rising 105%. 

On Monday, Nokia said Spain’s largest internet exchange, ESpanix, has deployed Nokia Deepfield Defender to protect its platform and connected networks from increasingly sophisticated distributed denial-of-service (DDoS) attacks. Additionally, Nokia is set to rejoin the Euro Stoxx 50 index starting next week, replacing Volkswagen after a one-year absence. 

NOK Stock: Retail View 

On Stocktwits, retail sentiment around the stock remained in ‘extremely bullish’ territory. The stock saw a 925% surge in message volume over the past week with a 0.3% gain in watchers. 

A user said, “Likely to see $15 in the near future. Notice, retrace happened before premarket today, in 24 hour market, due to AI fears. Could see back at $11 as soon as tomorrow.” 

NOK stock has gained 49% year to date. 

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