Key Highlights
- Bank of America elevated Nokia from Neutral to Buy, raising the price target from €6.87 to €10.70.
- Shares in Helsinki climbed approximately 2% following the rating change.
- The bullish call centers on Nokia’s expanding optical networking operations and AI infrastructure demand.
- Analysts project a 17% compound annual growth rate for Nokia’s Optical Networks division through 2028.
- BofA’s earnings forecasts for 2026–2028 exceed consensus estimates by 13–15%.
Nokia shares gained momentum Monday after Bank of America elevated its rating on the Finnish telecommunications equipment manufacturer to Buy, citing accelerating optical networking operations and strengthening demand from hyperscale cloud providers constructing AI-focused infrastructure.
Led by analyst Oliver Wong, BofA’s upgrade included a dramatic price target revision from €6.87 to €10.70 — representing a 56% increase. By midday GMT, Nokia shares had appreciated nearly 2% in Helsinki markets.
The financial institution also modified its valuation approach, transitioning from an EV/EBITDA framework to a sum-of-the-parts methodology. This new model assigns a 30x multiple to 2027 projected EBIT for Nokia’s Optical and IP Networks operations, while applying a 10x multiple to remaining business units.
BofA’s investment case heavily weighs the 2025 Infinera acquisition. This transaction significantly enhanced Nokia’s access to major U.S. cloud providers, positioning the company as a key beneficiary of AI infrastructure buildout.
Analysts forecast Nokia’s Optical Networks division will expand at a 17% compound annual rate through 2028. This projection stems from accelerating optical systems adoption and anticipated revenue growth in coherent pluggable technology as the sector transitions from 400G to 800G transmission speeds.
Wong’s research team characterized Nokia as “evolving into an optical powerhouse with distinct European advantages.” They consider the company’s internal 10–12% growth projection for Optical and IP Networks as understated, anticipating Nokia will surpass these targets.
IP Networks and European Data Centers
Regarding IP Networks, BofA anticipates Nokia will capture meaningful market share in European data center switching infrastructure, bolstered by its collaboration with NScale, a neocloud platform concentrated on European operations.
Analysts estimate Nokia could generate €226 million in data center switching sales during 2026, scaling to €407 million by 2028.
Mobile Infrastructure constitutes Nokia’s largest revenue segment. BofA projects operating margins in this division will expand from 13.4% in 2025 to 17.8% by 2028, supported by strategic portfolio optimization and increased software emphasis.
Nvidia Partnership and Huawei Upside
Nokia’s strategic alliance with Nvidia provides additional upside potential. Nvidia committed $1 billion to Nokia in October 2025, targeting AI-RAN applications. While BofA doesn’t project substantial near-term revenue from this partnership, analysts view it as a significant long-term catalyst.
Potential displacement of Huawei and ZTE infrastructure throughout Europe remains outside BofA’s base financial model — yet this scenario presents considerable upside opportunity should regulatory or geopolitical pressures continue steering European carriers toward alternative vendors.
BofA’s earnings per share projections for 2026–2028 exceed Street consensus by 13–15%. This variance indicates the market has yet to fully incorporate Nokia’s optical networking transformation into current valuations, according to BofA’s analysis.
Jefferies maintains a Buy rating on Nokia as well, with an €8.80 price target established in their April 8 research report.
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