TLDR
- Rosenblatt launched coverage on Nokia with a Buy recommendation and $15 price objective, highlighting its optical networking division as a strategic AI infrastructure investment.
- The company’s Optical Networks division posted 20% year-over-year revenue expansion in Q2 2026, while AI and Cloud revenue more than doubled.
- Artificial intelligence and Cloud orders totaled €2.8 billion in the second quarter, with approximately 50% projected to generate revenue in the next 12 months.
- Nokia has teamed up with Telxius to implement Nokia’s ICE-X 800G coherent pluggable optics throughout terrestrial networks spanning Europe, the United States and Latin America.
- Rosenblatt projects Nokia’s operating margins will exceed 15% by 2028, a significant increase from 11.5% in 2026.
Rosenblatt launched coverage of Nokia on Monday with a Buy recommendation and $15 price objective, arguing that the Finnish telecommunications equipment manufacturer remains underappreciated for its expanding optical networking operations.
According to analyst Mike Genovese, Nokia’s Network Infrastructure division is “quietly becoming one of the best-positioned optical assets in the AI buildout.” This represents a significant observation considering Nokia continues to command a traditional telecom-equipment valuation instead of an AI infrastructure premium.
Nokia’s ADR (NOK) was hovering near $9.65 when this report was published, experiencing notable declines during the trading session.
The Optical Networks division at Nokia delivered 20% year-over-year revenue growth during Q2 2026. Revenue from AI and Cloud applications more than doubled during this timeframe. Orders related to AI and Cloud reached €2.8 billion, with approximately half anticipated to translate into revenue over the coming 12 months.
The Optical Networks business represents approximately 45% of Nokia’s Network Infrastructure division and roughly 20% of consolidated company revenue. Genovese observed that Nokia’s trailing twelve-month Optical Networks sales of approximately $4 billion position it comparably to Ciena, an acknowledged industry leader.
Nokia’s Strategic Position in AI Data Center Infrastructure
Genovese emphasized Nokia’s strength in “scale-across” networking, characterizing it as the most difficult of three AI data center fabric categories to replace once a vendor achieves design-in status. This type of customer retention carries significant weight when evaluating long-term growth prospects.
Rosenblatt projects the broader Optical DCI marketplace, currently valued at approximately $12 billion, could expand at roughly a 35% compound annual growth rate to reach $40 to $50 billion by 2030. The scale-across addressable market alone is estimated to exceed $20 billion by 2030, supplementing the existing $20 billion DCI foundation.
To strengthen its supply chain capabilities, Nokia is making investments in three U.S.-based Indium Phosphide laser manufacturing facilities, situated in San Jose, Pennsylvania, and a recently established campus in Chandler, Arizona, obtained through its NXP acquisition.
Rosenblatt’s $15 price objective derives from a sum-of-the-parts valuation methodology that attributes one-third of Nokia’s worth to AI infrastructure and two-thirds to its conventional telecom operations. Genovese characterized this allocation as “potentially conservative” considering projections that the revenue mix will continue shifting toward AI applications.
Nokia Partners with Telxius for 800G Optics Deployment Across Three Continents
In a separate development, Nokia revealed a collaboration with Telxius to roll out its ICE-X 800G coherent pluggable optics throughout Telxius’ terrestrial transport infrastructure in Europe, the United States and Latin America.
The implementation leverages IP-over-DWDM technology to address increasing demand from cloud applications, AI processing requirements and data center interconnection needs. Nokia’s automation solutions provide Telxius with comprehensive network visibility and performance tracking capabilities.
This collaboration extends a recent joint demonstration conducted over Telxius’ BRUSA subsea cable, where Nokia’s 800G ZR+ technology achieved 400 Gb/s per wavelength across distances exceeding 5,600 km.
Regarding Nokia’s remaining business segments, Genovese characterized Fixed Networks and Mobile Infrastructure as low-single-digit growth operations being optimized for margin enhancement, supported by AI-RAN deployment and cost reduction initiatives including reduced exposure to China operations. Rosenblatt forecasts operating margins surpassing 15% in 2028, compared to 11.5% in 2026.
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