Key Takeaways
- Bank of America elevated Nokia to Buy from Neutral, raising the price target from €6.87 to €10.70.
- Shares of Nokia advanced approximately 2% in Helsinki trading after the rating change.
- The bullish call centers on Nokia’s expanding optical networking operations and AI infrastructure demand.
- Analysts project Nokia’s Optical Networks division will expand at a 17% compound annual growth rate until 2028.
- BofA’s earnings projections for 2026–2028 exceed Wall Street consensus by 13–15%.
Shares of the Finnish telecommunications equipment manufacturer moved higher Monday following Bank of America’s decision to upgrade the company, highlighting strengthening optical networking operations and increased spending from cloud giants investing in artificial intelligence capabilities.
Oliver Wong, an analyst at BofA, spearheaded the rating revision, boosting the price objective from €6.87 to €10.70 — representing a 56% increase. By midday GMT, Nokia shares had appreciated nearly 2% during Helsinki market hours.
The financial institution simultaneously adjusted its valuation approach, transitioning from an EV/EBITDA framework to a sum-of-the-parts methodology. The 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.
The Infinera acquisition completed in 2025 forms a cornerstone of BofA’s investment thesis. This strategic purchase strengthened Nokia’s relationships with major U.S. cloud providers and marks what analysts consider a pivotal shift in the company’s competitive stance.
Projections indicate Nokia’s Optical Networks division will achieve a 17% compound annual expansion rate through 2028. The growth trajectory stems from increasing demand for optical systems 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 “evolving into an optical powerhouse with a European advantage.” They consider the company’s official 10–12% growth forecast for Optical and IP Networks as understated, anticipating Nokia will exceed and subsequently raise guidance.
IP Networks and European Data Centers
Regarding IP Networks, BofA anticipates Nokia gaining market share in European data center switching infrastructure, supported by its alliance with NScale, a next-generation cloud operator concentrating on European markets.
Analysts project Nokia could generate €226 million from data center switching operations 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, fueled by strategic portfolio rationalization and increased emphasis on software solutions.
Nvidia Partnership and Huawei Upside
The collaboration with Nvidia contributes additional strategic value. Nvidia committed $1 billion to Nokia in October 2025, targeting AI-RAN applications. While BofA hasn’t incorporated substantial near-term revenue from this partnership into current models, analysts view it as a significant long-term catalyst.
Potential equipment replacement opportunities involving Huawei and ZTE across European markets aren’t reflected in BofA’s base scenario — though this represents genuine upside potential should regulatory or geopolitical pressures continue encouraging European carriers to transition away from Chinese suppliers.
BofA’s earnings estimates for 2026–2028 sit 13–15% above Street consensus figures. This discrepancy indicates the broader market hasn’t completely incorporated Nokia’s optical networking transformation into current valuations, according to BofA’s assessment.
Jefferies maintains a Buy rating on Nokia as well, setting a price target of €8.80 in research published April 8.
