Key Highlights
- Bank of America elevated Nokia from Neutral to Buy rating, raising the price target from €6.87 to €10.70.
- Shares of Nokia advanced approximately 2% in Helsinki trading after the upgrade was announced.
- The positive outlook stems from Nokia’s expanding optical networking operations and surging AI infrastructure needs.
- BofA projects Nokia’s Optical Networks division to expand at a 17% compound annual growth rate until 2028.
- The bank’s earnings per share projections for 2026–2028 exceed market consensus by 13–15%.
Shares of Nokia gained momentum Monday following Bank of America’s decision to upgrade the Finnish telecommunications equipment manufacturer to Buy, citing the company’s expanding optical networking operations and increasing demand from hyperscale cloud providers constructing AI-focused data centers.
BofA’s Oliver Wong spearheaded the upgrade, elevating the price objective from €6.87 to €10.70 — representing a substantial 56% increase. Nokia shares advanced nearly 2% during Helsinki’s midday trading session GMT.
The financial institution also revised its valuation methodology, transitioning from an EV/EBITDA approach to a sum-of-the-parts framework. The new model assigns a 30x multiple on 2027 projected EBIT for Nokia’s Optical and IP Networks operations, while applying a 10x multiple to remaining business units.
The 2025 Infinera acquisition forms the cornerstone of BofA’s investment rationale. This transaction enhanced Nokia’s access to major U.S. cloud providers, and BofA identifies it as a pivotal moment in the company’s strategic evolution.
BofA anticipates Nokia’s Optical Networks division will achieve a 17% compound annual growth rate extending through 2028. The bank highlights accelerating demand for optical systems and anticipates substantial growth in coherent pluggable revenues as the sector transitions from 400G to 800G transmission speeds.
Wong’s research group characterized Nokia as “transforming into an optical powerhouse with a European advantage.” The analysts believe the company’s own 10–12% growth projection for Optical and IP Networks appears understated, anticipating Nokia will surpass and subsequently revise these targets upward.
IP Networks and European Data Centers
Regarding IP Networks, BofA anticipates Nokia will gain market share in European data center switching infrastructure, supported by its collaboration with NScale, a neocloud provider concentrating on European markets.
The investment bank projects Nokia could generate €226 million in data center switching revenues during 2026, escalating to €407 million by 2028.
Mobile Infrastructure constitutes Nokia’s primary revenue segment. BofA forecasts operating margins in this division will climb from 13.4% in 2025 to 17.8% by 2028, propelled by strategic portfolio optimization and increased emphasis on software solutions.
Nvidia Partnership and Huawei Upside
Nokia’s strategic alliance with Nvidia introduces 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 current models, the firm identifies it as a substantial long-term catalyst.
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 accelerate European carriers’ migration away from Chinese equipment suppliers.
BofA’s earnings per share forecasts for 2026–2028 stand 13–15% above consensus estimates. This differential indicates the market hasn’t completely factored in Nokia’s optical networking transformation, according to BofA’s analysis.
Jefferies maintains a Buy rating on Nokia as well, with an €8.80 price objective, established in research published April 8.
