Nokia Oyj shares closed 3.69% higher in Helsinki at €9.276 on Monday, extending gains as a wave of analyst upgrades and price target increases highlighted the company's expanding role in AI-driven data center networking. In U.S. trading, the stock rose 2.6% to $10.735 after hitting a session high of $11.295.
The Finnish telecom equipment maker reported first-quarter comparable operating profit of €281 million, a 54% year-over-year increase that surpassed the consensus estimate of €250 million from an Infront analyst poll. Revenue from AI and cloud customers jumped 49% during the quarter, accounting for 8% of total sales, while orders from these segments reached €1 billion.
Nokia raised its 2026 growth target for the Network Infrastructure division to 12%-14%, up sharply from the previous 6%-8% range. The division, which supplies optical and IP networking hardware used by cloud giants and telecom operators, is benefiting from surging demand for high-capacity data transport in AI data centers.
Analysts responded swiftly to the results. Argus analyst Jim Kelleher upgraded Nokia's U.S. shares to Buy from Hold with a $15 price target, citing stronger AI-driven demand. Jefferies analyst Janardan Menon maintained a Buy rating and raised his price target to €10.70 from €8.80. JPMorgan's Sandeep Deshpande doubled his target to €12 from €6.90 while keeping a Buy rating. AlphaValue/Baader also raised its outlook after incorporating higher Network Infrastructure growth assumptions.
CEO Justin Hotard said in the earnings statement that "demand has accelerated significantly." Nokia is ramping up investment in Optical Networks and expects combined growth of 18%-20% this year for its Optical Networks and IP Networks segments. The company's strategic shift from legacy telecom gear toward AI infrastructure is gaining traction, positioning it as a key player in the race to build out data center networks.
In the optical networking market, Nokia's acquisition of Infinera may push it ahead of Ciena to become the second-largest player globally after Huawei, with a 20% market share, according to Reuters. This competitive positioning underscores the company's pivot toward high-growth segments beyond its traditional 5G rivalry with Ericsson.
Shareholders noted that Monday marked the ex-dividend date for the first installment of Nokia's dividend, set at €0.04 per share. The record date is April 28, with payment expected by May 7.
Despite the upbeat momentum, Hotard cautioned about Europe's lagging connectivity and data center infrastructure for AI expansion. Speaking to Reuters, he warned that without rapid upgrades, businesses and developers could shift operations to the U.S. or China, highlighting a potential headwind for Nokia's European operations.
Nokia also reminded investors that forward-looking targets carry risks and uncertainties. The sharp stock move raises the question of whether order books will translate into solid deliveries and whether margin gains can be sustained as spending ramps up in optical and IP networks.
