Key Takeaways
- Morgan Stanley increased Nokia’s price target to €8.50 from €6.50, establishing the highest analyst target on the Street, while maintaining an Overweight rating
- The bullish stance stems from accelerating AI infrastructure and cloud spending, especially within optical and IP networking sectors
- AI and cloud-related revenue currently represents approximately 6% of Nokia’s total revenue but is expanding rapidly, with Morgan Stanley projecting roughly 13% segment growth for 2026
- Recent analyst downgrades from DNB Carnegie and Danske Bank, along with Nokia’s lowered 2026 profit forecast, had previously pressured shares
- Nokia’s ADR (NOK) traded around $7.90 on Tuesday, while the Helsinki-listed shares have climbed approximately 24% year-to-date
Nokia, the telecommunications equipment giant based in Finland, received a significant boost this week when Morgan Stanley designated it as a top pick and established a new street-leading price target.
The investment bank elevated its price target to €8.50 from €6.50, maintaining its Overweight rating. This represents the most optimistic target among all analysts tracking the company, based on Bloomberg’s data compilation.
The upgrade comes on the heels of impressive results from optical networking competitor Ciena, which delivered robust cloud-driven revenue expansion. Morgan Stanley believes these figures validate its thesis that Nokia’s projections for its Optical and IP business unit may be understated.
Nokia has projected 10% to 12% revenue expansion for this division. Morgan Stanley forecasts approximately 13% growth, with optical networking revenue specifically expected to surge over 20%, driven primarily by hyperscale data center operators.
Recent trading has been choppy for the stock. Helsinki-listed Nokia shares rallied more than 12% during the previous week and have soared over 37% in the past month — creating conditions ripe for profit-taking. Shares declined roughly 5% midweek after falling beneath their 5-day moving average.
The American Depositary Receipt on the New York Stock Exchange closed near $7.90 on Tuesday, gaining 1.28% for the session. Helsinki shares stood at €6.83 on Wednesday, representing about a 24% year-to-date advance.
Contrarian Views Create Market Tension
The analyst community isn’t uniformly optimistic. DNB Carnegie downgraded Nokia from buy to hold on March 10, establishing a $6.50 price target. Danske Bank executed a comparable downgrade in late February, also setting a $6.50 target.
These downgrades, coupled with Nokia’s announcement of a reduced 2026 profit forecast during its Q4 earnings release, have maintained a cautious stance among certain investors — despite Nokia marginally exceeding earnings projections.
For Q4, Nokia delivered adjusted operating profit of €435 million on net sales totaling €4.83 billion, with revenue climbing 12% year-over-year. However, profitability declined approximately 10% versus the comparable prior year quarter.
The mobile networks division continues to face headwinds, with radio access network capital expenditures remaining subdued and mobile revenue declining roughly 2% year-over-year in the most recent quarter.
Cloud and AI Infrastructure Powering Growth Narrative
Nokia’s AI and cloud-focused business currently accounts for a modest portion of overall revenue — approximately 6% — but is experiencing rapid expansion and helping compensate for softer telecom operator capital spending.
Morgan Stanley increased its valuation multiple from 10× to 14× on projected operating profit, emphasizing Nokia’s expanding exposure to data center connectivity markets.
Nokia currently provides networking infrastructure to Microsoft Azure and collaborates with NVIDIA on AI networking solutions. NVIDIA maintains a 2.9% ownership stake in the company.
The bank highlighted the Optical Fiber Communication Conference, scheduled for March 15 to 19, as an important near-term catalyst. The event could yield updates on Nokia’s optical roadmap and potentially announce new hyperscale customer partnerships.
Moody’s reaffirmed Nokia’s Ba1 credit rating last December and upgraded its outlook to positive, referencing anticipated profitability improvements spanning 2026 through 2028. Nokia concluded September 2025 with approximately €6.1 billion in cash and committed credit facilities.
The broader analyst consensus leans cautiously optimistic. A MarketBeat consensus compilation from early January indicated a “Moderate Buy” rating with 8 buy recommendations, 3 holds, and 1 sell rating across 12 analysts. The average 12-month ADR price target stood around $6.10, though certain models place it closer to $7.36, with the high now reaching $8.50 — established by Morgan Stanley.
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