Nokia (NOK) Stock Surges Following Bank of America’s Bullish Upgrade on AI Infrastructure Play

Key Takeaways

• Bank of America elevated Nokia from Neutral to Buy, raising the price target to €10.70 from €6.87.
• Shares of Nokia advanced nearly 2% in Helsinki trading after the upgrade was announced.
• The bullish call centers on Nokia’s expanding optical networking operations and AI data center opportunities.
• BofA projects Nokia’s Optical Networks division will achieve a 17% compound annual growth rate until 2028.
• The bank’s earnings per share projections for 2026–2028 exceed consensus estimates by 13–15%.

Shares of Nokia climbed on Monday following Bank of America’s decision to upgrade the Finnish telecommunications equipment manufacturer to Buy, citing accelerating momentum in optical networking and increasing demand from hyperscale cloud providers building AI-focused infrastructure.

Nokia Oyj, NOK

BofA analyst Oliver Wong spearheaded the ratings change, elevating the price target from €6.87 to €10.70 — representing a substantial 56% increase. By midday GMT, Nokia shares had gained approximately 2% in Helsinki.

The investment bank also revised its valuation approach, transitioning from an EV/EBITDA methodology to a sum-of-the-parts framework. This new model assigns a 30x multiple on projected 2027 EBIT for Nokia’s Optical and IP Networks division, while applying a 10x multiple to remaining business segments.

The 2025 Infinera acquisition plays a critical role in BofA’s investment thesis. This transaction strengthened Nokia’s footprint with major U.S. cloud providers, and analysts view it as a strategic inflection point for the company’s market positioning.

BofA forecasts Nokia’s Optical Networks division will expand at a 17% compound annual growth rate through 2028. The projection is underpinned by increasing demand for optical systems and anticipated revenue acceleration in coherent pluggable technology as the industry transitions from 400G to 800G transmission speeds.

Wong’s research team characterized Nokia as “evolving into an optical powerhouse with a distinctly European competitive edge.” The analysts believe the company’s official 10–12% growth guidance for Optical and IP Networks is overly cautious, anticipating Nokia will exceed these targets and revise them upward.

IP Networks Growth and European Data Center Opportunities

Regarding IP Networks, BofA anticipates Nokia will gain significant market share in European data center switching, bolstered by its strategic alliance with NScale, a neocloud operator with strong European market focus.

The investment bank projects Nokia could generate €226 million in data center switching revenue during 2026, expanding to €407 million by 2028.

Mobile Infrastructure continues to represent Nokia’s largest revenue generator. BofA forecasts operating margins in this segment will improve from 13.4% in 2025 to 17.8% by 2028, supported by portfolio optimization and increased software emphasis.

Nvidia Collaboration and Chinese Vendor Replacement Potential

Nokia’s strategic partnership with Nvidia provides additional upside potential. Nvidia committed $1 billion to Nokia in October 2025, targeting AI-RAN applications. While BofA doesn’t anticipate substantial near-term revenue from this collaboration, the bank identifies it as a meaningful long-term catalyst.

Potential replacement of Huawei and ZTE infrastructure throughout Europe isn’t incorporated into BofA’s baseline projections — but analysts recognize this as genuine upside potential if regulatory pressures or political considerations continue steering European carriers away from Chinese equipment suppliers.

BofA’s earnings per share estimates for 2026–2028 sit 13–15% above consensus Street forecasts. This divergence indicates the market hasn’t fully incorporated Nokia’s optical networking transformation into current valuations, according to BofA’s assessment.

Jefferies maintains a Buy rating on Nokia as well, with an €8.80 price target established in an April 8 research report.

The post Nokia (NOK) Stock Surges Following Bank of America’s Bullish Upgrade on AI Infrastructure Play appeared first on Blockonomi.