Key Takeaways
- Investment firm Rosenblatt launched coverage on Nokia with a Buy recommendation and $15 price target, highlighting the optical networking division’s AI infrastructure potential.
- The company’s Optical Networks segment posted 20% revenue growth year-over-year in Q2 2026, while AI and Cloud revenue more than doubled.
- Second quarter AI and Cloud orders totaled ā¬2.8 billion, with approximately half projected to become revenue within a year.
- A new collaboration between Nokia and Telxius will bring Nokia’s ICE-X 800G coherent pluggable optics to terrestrial networks spanning Europe, the United States and Latin America.
- The firm projects Nokia’s operating margins will exceed 15% by 2028, compared to 11.5% in 2026.
Rosenblatt began tracking Nokia shares on Monday with a Buy recommendation and $15 valuation target, arguing that the Finnish telecommunications infrastructure company is underappreciated for its expanding optical networking operations.
According to analyst Mike Genovese, Nokia’s Network Infrastructure division is “quietly becoming one of the best-positioned optical assets in the AI buildout.” This represents a significant observation considering Nokia continues to be valued as a traditional telecom equipment provider instead of receiving an AI infrastructure premium.
Nokia’s ADR (NOK) was changing hands near $9.65 at publication time, experiencing a notable decline during the session.
The company’s Optical Networks division delivered 20% year-over-year revenue expansion in Q2 2026. AI and Cloud revenue increased by more than 100% during the identical timeframe. AI and Cloud order volume hit ā¬2.8 billion, with approximately half anticipated to translate into recognized revenue over the next 12 months.
The Optical Networks business represents approximately 45% of Nokia’s Network Infrastructure segment and roughly 20% of consolidated company revenue. Genovese observed that Nokia’s trailing twelve-month Optical Networks sales of approximately $4 billion places it on comparable footing with Ciena, an acknowledged industry leader.
Nokia’s Strategic Position in AI Data Center Infrastructure
Genovese emphasized Nokia’s strength in “scale-across” networking, which he characterized as the most challenging of three AI data center fabric categories to replace once a vendor achieves design-in status. This type of customer retention is critical when evaluating the long-term market potential.
Rosenblatt projects the overall Optical DCI market, presently valued around $12 billion, could expand at approximately 35% annually to achieve $40 to $50 billion by 2030. The scale-across addressable market alone is estimated to exceed $20 billion by 2030, in addition to the current $20 billion DCI foundation.
To strengthen its supply chain capabilities, Nokia is funding three U.S.-based Indium Phosphide laser manufacturing sites, situated in San Jose, Pennsylvania, and a recently established campus in Chandler, Arizona, obtained through its NXP transaction.
Rosenblatt’s $15 valuation target derives from a sum-of-the-parts analysis that allocates one-third of Nokia’s enterprise value to AI infrastructure operations and two-thirds to its conventional telecom activities. Genovese characterized this allocation as “potentially conservative” considering expectations that the revenue composition will continue shifting toward AI.
Nokia Partners with Telxius for Multi-Continent 800G Optics Rollout
In a separate development, Nokia revealed a collaboration with Telxius to implement its ICE-X 800G coherent pluggable optics throughout Telxius’ terrestrial transport infrastructure in Europe, the United States and Latin America.
The implementation leverages IP-over-DWDM technology to address increasing demand from cloud computing, AI applications and data center interconnection needs. Nokia’s automation capabilities provide Telxius with comprehensive network visibility and performance tracking.
This collaboration follows a recent joint demonstration conducted over Telxius’ BRUSA subsea cable, where Nokia’s 800G ZR+ technology achieved 400 Gb/s per wavelength across more than 5,600 km.
Regarding Nokia’s additional business units, Genovese characterized Fixed Networks and Mobile Infrastructure as low-single-digit growth operations being optimized for margin expansion, supported by AI-RAN implementation and cost reduction measures including reduced Chinese market exposure. Rosenblatt forecasts 2028 operating margins surpassing 15%, advancing from 11.5% in 2026.
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