Nokia surges 90% in 2026 as AI data center pivot reshapes the company

Nokia has transformed from a fading mobile infrastructure supplier into a key AI data center player, validated by a $1 billion Nvidia investment.

Nokia's stock has surged roughly 90% this year as the Finnish company pivots from legacy mobile networks to supplying the optical and switching infrastructure that moves data inside AI data centers. The company sells equipment and software that acts as a logistics system for AI workloads — switches that connect servers and routers that direct data traffic between thousands of miles of fiber cables inside hyperscale facilities.

"Nokia's offerings are the backbone of the AI economy," Chief Executive Justin Hotard, who previously ran Intel's data center and AI business, said in a statement.

The transformation accelerated after Nvidia bought a 2.9% stake in Nokia for $1 billion at $6.01 per share in May 2026, part of a partnership to develop AI-RAN, a new category of radio access networks built for AI workloads. T-Mobile also signed on to run field trials of AI-RAN this year. Nokia's North American optical network market share jumped to 27.3% in 2025 from 6.3% a year earlier, according to Omdia research director Ian Redpath, placing it second behind Ciena at 50.1%.

Nokia nearly doubled its full-year growth guidance for the optical networks unit to 18%-20% after a strong first quarter. The company reports Q2 2026 results on July 23 — the first report where investors can assess how the Nvidia partnership is showing up in order books and whether the new San Jose fabrication facility is on schedule.

The Optical Edge

Nokia's optical networking business may be the more durable story. The company is bringing a second indium phosphide semiconductor fabrication facility online in San Jose, California, later this year. Indium phosphide is the substrate that powers high-speed optical transceivers — the components that physically move data inside AI data centers at speeds those workloads demand. Nokia builds these in-house, while most competitors do not.

That vertical integration gives Nokia a supply advantage in a market where component lead times remain stretched. Hotard said in April that the company faces long lead times for some components and is considering ways to secure supply as it expects higher semiconductor prices. "Long lead times are a risk. If those lead times get unpredictable, then their revenue gets unpredictable," Omdia's Redpath said.

What the Nvidia Deal Signals for Valuation

Nokia's mobile infrastructure business still accounts for just over half of revenue, but that unit has been declining as carriers largely completed their 5G deployments. The AI infrastructure business is now the growth engine. Nokia acquired Infinera, a maker of optical networking technology, in a $2.3 billion deal last year to accelerate the shift.

The stock's 90% rally reflects a re-rating as investors price Nokia as an AI infrastructure company rather than a legacy telecom equipment maker. But the valuation has run ahead of the fundamentals, said Amanda Lyons, head of research at Energy Group Capital. "The market is now waiting for the earnings to catch up to the story," she said.

Nokia shares trade with the volatility of AI-affiliated stocks, fluctuating as investors weigh the sector's massive capital spending against uncertain monetization timelines. The company's market cap peaked at more than $250 billion during the dot-com bubble in 2000. Today, with a validated AI thesis and Nvidia as a strategic backer, Nokia is betting that its second act can approach that scale.

This article is for informational purposes only and does not constitute investment advice.