Key Takeaways
- Bank of America elevated Nokia from Neutral to Buy, raising the price target from €6.87 to €10.70.
- Shares advanced nearly 2% in Helsinki during Monday trading after the upgrade.
- The firm’s optimism centers on optical networking expansion and hyperscaler AI infrastructure investment.
- BofA projects Nokia’s Optical Networks division will expand at a 17% compound annual growth rate through 2028.
- The bank’s earnings projections for 2026–2028 exceed Street consensus by 13–15%.
Nokia shares moved higher Monday after Bank of America elevated the Finnish telecom equipment manufacturer to Buy, highlighting the company’s expanding optical networking operations and strengthening demand from hyperscale providers constructing AI-focused infrastructure.
BofA analyst Oliver Wong spearheaded the upgrade, raising Nokia’s valuation from €6.87 to €10.70—marking a 56% increase in the price objective. Helsinki-traded shares climbed approximately 2% by midday GMT.
The investment bank simultaneously adjusted its valuation framework, transitioning from EV/EBITDA methodology to a sum-of-the-parts approach. The new model assigns a 30x multiple to 2027 projected EBIT for Nokia’s Optical and IP Networks operations, while applying a 10x multiple across remaining business units.
The 2025 Infinera acquisition forms the cornerstone of BofA’s investment case. This transaction expanded Nokia’s reach into U.S. cloud provider relationships, which BofA characterizes as a strategic inflection point for market positioning.
Nokia’s Optical Networks division faces projected growth of 17% annually through 2028. BofA attributes this trajectory to accelerating optical systems adoption and anticipated revenue acceleration in coherent pluggable technology 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 Nokia’s own 10–12% growth projection for Optical and IP Networks as understated, anticipating the company will exceed and subsequently revise guidance upward.
IP Networks and European Data Centers
Regarding IP Networks, BofA anticipates Nokia will capture market share in European data center switching, supported by its strategic alliance with NScale, a neocloud platform concentrating on European markets.
The bank projects Nokia could generate €226 million from data center switching in 2026, scaling to €407 million by 2028.
Mobile Infrastructure constitutes Nokia’s primary revenue generator. BofA forecasts operating margins in this segment will climb 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 provides additional strategic depth. Nvidia committed $1 billion to Nokia in October 2025, targeting AI-RAN applications. While BofA hasn’t incorporated significant near-term revenue from this alliance, the firm identifies it as a favorable long-term catalyst.
Potential displacement of Huawei and ZTE infrastructure throughout Europe remains outside BofA’s baseline projections—though this scenario represents substantial upside potential if regulatory or geopolitical pressures intensify operator shifts away from Chinese equipment suppliers.
BofA’s earnings forecasts for 2026–2028 stand 13–15% above consensus Wall Street estimates. This differential indicates the market has yet to fully recognize Nokia’s optical transformation, according to BofA’s perspective.
Jefferies maintains a Buy recommendation on Nokia with an €8.80 price target, established in an April 8 research note.
