Key Takeaways
- Morgan Stanley elevated Nokia’s price target to €8.50 from €6.50, establishing the highest analyst target on the street while maintaining an Overweight rating
- The bullish call stems from accelerating AI and cloud infrastructure investments, especially within optical and IP networking segments
- While AI/cloud revenue represents approximately 6% of Nokia’s total sales, it’s expanding rapidly, with Morgan Stanley projecting roughly 13% segment growth in 2026
- Recent downgrades from DNB Carnegie and Danske Bank, combined with Nokia’s lowered 2026 profit guidance, had previously pressured shares
- Nokia’s ADR (NOK) traded around $7.90 on Tuesday, while the Helsinki-listed shares have climbed approximately 24% year-to-date
The Finnish telecommunications equipment manufacturer Nokia received a significant boost this week when Morgan Stanley designated it as a top pick and established a new street-high valuation target.
The investment bank elevated its price objective to €8.50 from €6.50 while reaffirming its Overweight stance. This target now surpasses all other analysts tracking the company, based on Bloomberg’s compiled data.
The upgrade comes on the heels of impressive performance from optical networking competitor Ciena, which delivered robust cloud-driven revenue expansion. Morgan Stanley believes these results validate the thesis that Nokia’s own projections for its Optical and IP business unit may be understated.
Nokia has projected 10% to 12% revenue expansion in this division. Morgan Stanley’s forecast sits at approximately 13%, with optical networking sales alone anticipated to surge over 20%, driven predominantly by hyperscale data center customers.
The shares have experienced considerable volatility in recent weeks. Helsinki-traded Nokia shares rallied more than 12% in the prior week and have soared over 37% during the past month — creating opportunities for some shareholders to lock in gains. The stock retreated roughly 5% midweek after breaking below its 5-day moving average.
The American Depositary Receipt trading on the New York Stock Exchange closed near $7.90 on Tuesday, advancing 1.28% for the session. The Helsinki-listed shares stood at €6.83 on Wednesday, representing approximately 24% gains year-to-date.
Contrasting Analyst Views Create Uncertainty
The analyst community isn’t unanimously optimistic. DNB Carnegie downgraded Nokia from buy to hold on March 10, establishing a $6.50 price target. Danske Bank executed a comparable move in late February, also settling on $6.50.
These downgrades, paired with Nokia’s announcement to reduce its 2026 profitability forecast during Q4 earnings, have maintained investor skepticism — despite Nokia marginally exceeding earnings projections.
In the fourth quarter, Nokia delivered adjusted operating profit of €435 million on net sales totaling €4.83 billion, with revenue climbing 12% year-over-year. Profitability declined approximately 10% versus the comparable prior-year period.
The mobile networks division continues facing headwinds, with radio access network investments remaining subdued and mobile revenue declining roughly 2% year-over-year in the latest quarter.
Cloud and AI Infrastructure Powers Growth Narrative
Nokia’s AI and cloud-focused operations currently represent a modest portion of overall revenue — approximately 6% — but the segment is experiencing rapid expansion and helping compensate for weaker telecom operator expenditures.
Morgan Stanley increased its valuation multiple from 10× to 14× on projected operating profit, highlighting Nokia’s expanding presence in data center connectivity markets.
Nokia currently provides networking infrastructure to Microsoft Azure and collaborates with NVIDIA on AI networking solutions. NVIDIA maintains a 2.9% ownership position in the company.
The investment bank identified the Optical Fiber Communication Conference, scheduled for March 15 to 19, as an important near-term catalyst. The event may deliver announcements regarding Nokia’s optical strategy and potentially new hyperscale partnerships.
Moody’s confirmed Nokia’s Ba1 credit rating in December and upgraded its outlook to positive, referencing anticipated profitability improvements spanning 2026 to 2028. Nokia concluded September 2025 with approximately €6.1 billion in cash and committed credit facilities.
The broader analyst sentiment leans cautiously optimistic. A MarketBeat consensus from early January indicated a “Moderate Buy” recommendation with 8 buy ratings, 3 holds, and 1 sell across 12 analysts. The average 12-month ADR target stood around $6.10, though certain models position it closer to $7.36, with the high now reaching $8.50 — established by Morgan Stanley.
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