Key Takeaways
- Bank of America elevated Nokia to Buy from Neutral, raising the price target to €10.70 from €6.87.
- Shares of Nokia advanced nearly 2% in Helsinki trading after the rating change.
- The positive call reflects Nokia’s expanding optical networking operations and surging AI data center requirements.
- BofA projects the Optical Networks division will expand at a 17% compound annual growth rate until 2028.
- The firm’s earnings per share projections for 2026–2028 exceed consensus estimates by 13–15%.
Nokia shares moved higher Monday following Bank of America’s decision to upgrade the Finnish telecommunications equipment manufacturer to Buy, highlighting the company’s expanding optical networking operations and increasing demand from hyperscale cloud providers constructing AI infrastructure.
BofA’s Oliver Wong spearheaded the rating revision, elevating Nokia’s valuation target from €6.87 to €10.70 — representing a substantial 56% increase. By midday GMT, Nokia’s shares had appreciated nearly 2% during Helsinki exchange trading.
The investment bank simultaneously adjusted its valuation methodology, transitioning from an EV/EBITDA framework to a sum-of-the-parts approach. BofA applied a 30x multiple to Nokia’s projected 2027 EBIT for its Optical and IP Networks division, while assigning a 10x multiple to remaining operations.
The 2025 Infinera acquisition sits at the heart of BofA’s investment thesis. This transaction strengthened Nokia’s connections with major U.S. cloud providers, representing what BofA characterizes as a pivotal shift in the company’s strategic positioning.
BofA anticipates Nokia’s Optical Networks division will achieve a 17% compound annual growth rate extending through 2028. The bank highlights increasing demand for optical systems combined with an anticipated spike in coherent pluggable revenues as the sector transitions from 400G to 800G transmission speeds.
Wong’s research team characterized Nokia as “transforming into an optical powerhouse with a European advantage.” The analysts consider the company’s internal 10–12% growth projection for Optical and IP Networks cautiously understated, anticipating Nokia will outperform and subsequently raise guidance.
IP Networks and European Data Centers
Regarding IP Networks, BofA believes Nokia is gaining traction within European data center switching markets, supported by its collaboration with NScale, a neocloud operator 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 continues as Nokia’s largest revenue-generating segment. BofA anticipates operating margins in this division will improve from 13.4% in 2025 to 17.8% by 2028, propelled by portfolio optimization and increased software emphasis.
Nvidia Partnership and Huawei Upside
Nokia’s collaboration with Nvidia contributes additional strategic value. Nvidia committed $1 billion to Nokia in October 2025, targeting AI-RAN applications. While BofA doesn’t anticipate significant immediate revenue from this partnership, the firm identifies it as a positive long-term catalyst.
Potential displacement of Huawei and ZTE infrastructure throughout Europe isn’t incorporated into BofA’s baseline projections — though it constitutes genuine upside potential should regulatory or geopolitical pressures continue encouraging European carriers to distance themselves from Chinese equipment vendors.
BofA’s earnings per share forecasts for 2026–2028 sit 13–15% above Wall Street consensus. This differential indicates the market hasn’t completely absorbed Nokia’s optical networking transformation, according to BofA’s assessment.
Jefferies maintains a Buy rating on Nokia as well, carrying a price target of €8.80, established in an April 8 research report.
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