Nokia Oyj (HEL:NOKIA) shares traded higher in Helsinki on Wednesday, bouncing back after a decline in New York, as the company detailed two significant infrastructure investments aimed at capitalizing on the growing demand for artificial intelligence and cloud computing capacity. The stock rose 1.17% to €12.15 on Nasdaq Helsinki as of 10:36 EEST, according to company data. However, its U.S. American Depositary Receipts (ADRs) slid 5.67% to $13.98 in New York trading.
The Finnish telecom equipment maker announced plans to nearly double its workforce at its Allentown, Pennsylvania facility, focusing on advanced test and packaging operations for photonic chips—a critical component for high-speed network modules. The expansion is part of Nokia's broader $4 billion multi-year U.S. investment in AI-focused connectivity research and development and manufacturing. CEO Justin Hotard described the move as "a direct investment in that future" as the "AI supercycle" drives fundamental changes in network architecture. The company expects headcount at the site to exceed 500, with capacity potentially increasing tenfold.
In a separate announcement ahead of the Helsinki session, Nokia revealed that Symphony Communication has selected it to upgrade the Malaysia-Cambodia-Thailand subsea cable system. The new target capacity is 30 terabits per second per fiber pair—nearly three times the current level—which Nokia said can support demanding workloads such as AI inference. Ajay Sharma, Nokia's Thailand country manager, emphasized the deal focuses on "advanced, trusted connectivity," while Symphony CEO Alex Loh said the upgrade will deliver "unmatched capacity and reliability."
These developments underscore Nokia's strategic pivot toward optical networks and hyperscaler customers, a shift that has been gaining momentum. In its first-quarter results, the company reported a 54% rise in comparable operating profit, with revenue from AI and cloud customers surging 49% to €1 billion in orders. Hyperscalers—including Amazon, Alphabet, and Microsoft—are increasingly important to Nokia's growth story, as they invest heavily in AI data centers. The company's $2.3 billion acquisition of Infinera, as reported by Reuters, is expected to make Nokia the second-largest optical networking player globally, trailing only Huawei, and could help it capture more orders from these tech giants.
Despite the positive sentiment, Nokia faces significant execution risks. The company's first-quarter filing highlighted challenges including intense competition, shifting investment plans by network buyers, supply chain constraints, manufacturing issues, and sourcing difficulties. Additionally, tariffs and currency fluctuations were cited as potential headwinds. Strong optical demand is a tailwind, but the impact on margins will depend on how effectively Nokia navigates these obstacles, manages customer spending, and responds to rivals like Ericsson in mobile networks and Ciena in optical.
Wednesday's share price move reflects early optimism around Nokia's AI network infrastructure plans, but it is not a definitive verdict on the company's long-term margin trajectory. Investors are closely watching for repeat orders, higher margins, and improved cash flow as key indicators of success. The stock's performance in Helsinki lagged the broader OMX Helsinki 25 index, which hovered near 6,300, as the market continues to assess the AI-networking theme's sustainability.
