The Finnish company pivoted aggressively towards AI-enabled networking products and services, and data center solutions under a new chief executive.
- Nokia stock has risen by about 50% year to date, heading for its best performance in four years.
- The Finnish networking giant has aggressively pivoted to AI-related products and the data center business this year, driving revenue growth.
- Nokia’s $2.3 billion acquisition of Infinera and a recent partnership with Nvidia have revived investor interest in the stock.
From a mobile phone powerhouse in the 1990s to a networking technology firm – via several reinventions in between – Nokia has lived many corporate lives. In its current avatar as an enterprise networking and technologies player, the Finnish company is ending a year that solidified its comeback and strategic footing.
Although the year was filled with small and large wins, investors sharpened their focus on Nokia after it clinched a key deal with Wall Street’s AI darling Nvidia. In late October, the chip designer said it would acquire a 2.9% stake in the Finnish networking company for $1 billion, making it Nokia's second-largest shareholder.
As part of the deal, the two would collaborate on AI networking solutions and explore opportunities to include Nokia’s data center communications products in Nvidia's future AI infrastructure plans.
AI Pivot
In many ways, the Nvidia deal was the result of a strategic reorientation of Nokia’s business that has been underway since last year, and more recently under the new CEO Justin Hotard, who took over in April.
Nokia has aggressively expanded its AI-linked portfolio – notably enhancing data center networking switches with breakthrough throughput and AI-enabled automation capabilities – and shifted its focus to only high-margin sectors, such as private 5G for enterprise and defense.
A cornerstone of the company’s strategy is its $2.3 billion acquisition of Infinera, which closed in April. Analysts said the deal significantly expands Nokia's scale in optical networking and ability to cloud giants like Amazon, Alphabet, and Microsoft, which are on a cloud capacity expansion spree.
Notably, Hotard, who earlier led Intel's data centers and AI group, is said to be focused on expanding Nokia’s data center business. The results clearly point to an early turnaround: revenue growth has accelerated sharply in the last couple of quarters, following six quarters of decline, even as costs have shrunk.
Stock And Retail Check
Following the Nvidia deal announcement on Oct. 28, Nokia’s U.S.-listed shares jumped over 22% to nearly their highest in a decade. The rally has contributed to a 50% gain in the stock so far this year, with NOK on track for its best performance in four years.
Although Stocktwits sentiment has been ‘bearish’ in the past month, NOK is very much on the radar of retail investors. Message volume for the ticker — which gained “meme stock” status back in 2021 —has increased by a whopping 700% over the past three months, while the watcher count has climbed by 2%.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<
