Nokia (NOK) Stock; Jumps 6% as Investors Reprice AI and Cloud Growth Story

TLDRs;

• Nokia shares rose nearly 6% as investors increasingly price the company as an AI and cloud infrastructure play.
• The stock has gained over 140% this year, reaching its highest level since 2008 amid strong momentum.
• AI and cloud still represent only 8% of revenue, despite rapid growth from hyperscaler demand.
• Investors remain divided, balancing strong growth outlook against rising valuation and execution risks.

Nokia Oyj shares surged nearly 6% in Helsinki trading as investors continued to reassess the company’s transformation into an AI and cloud infrastructure player. The stock climbed to 13.84 euros, briefly touching 13.98 euros during intraday trading, marking a fresh 52-week high and extending a powerful rally that has now pushed gains above 140% year-to-date.

The move reflects a broader shift in how the market is valuing Nokia. Once primarily viewed as a legacy telecom equipment provider, the Finnish group is increasingly being treated as a beneficiary of rising demand for data-center connectivity and AI-driven networking infrastructure.

Strong Year-to-Date Rally Intensifies

Nokia’s performance has placed it among Europe’s top-performing large-cap stocks, ranking near the top of the Stoxx Europe 600 leaderboard. The rally has also pushed shares to levels not seen since 2008, highlighting how dramatically sentiment has shifted in less than a year.

Nokia Oyj, NOK

Despite the strong momentum, analysts warn that valuation concerns are becoming more pronounced. The company’s forward price-to-earnings ratio has more than doubled since the beginning of the year, signaling that much of the optimism may already be priced in.

Still, momentum investors continue to dominate trading activity, reinforcing the perception that Nokia is undergoing a structural re-rating rather than a short-term speculative spike.

AI and Cloud Still a Small Slice

While AI enthusiasm is driving investor interest, Nokia’s actual exposure to the segment remains relatively modest. In the first quarter, AI and cloud-related sales accounted for just 8% of total revenue, even though that segment grew sharply on a year-over-year basis.

Net sales from AI and cloud customers jumped 49%, supported by rising demand from hyperscalers and data-center operators. This strong growth helped lift first-quarter operating profit by more than 50%, beating analyst expectations.

Management has emphasized that demand is accelerating, and the company is targeting a 27% annual growth rate for its addressable AI and cloud market through 2028. However, the relatively small revenue contribution highlights the gap between narrative and financial scale.

Data Center Strategy and AI Expansion

Nokia has been actively positioning itself deeper into the AI infrastructure ecosystem. A key development was the launch of its AI Networking Innovation Lab in Sunnyvale, California, aimed at strengthening partnerships with major technology players including AMD, Lenovo, Supermicro, and other infrastructure firms.

The initiative underscores Nokia’s ambition to move further into high-performance networking for AI workloads, particularly optical and fiber-based systems that enable rapid data movement between servers.

Industry analysts have noted that Nokia’s growing exposure to cloud infrastructure is prompting comparisons with leading U.S. networking firms, though they caution that traditional telecom operations still form the backbone of the business.

Valuation Debate and Investor Caution

Despite the bullish momentum, caution is emerging among analysts regarding sustainability. Some argue that Nokia’s share price has run ahead of fundamentals, especially given that mobile networks still account for the majority of revenue and carry lower margins than AI-related segments.

Others believe the market may eventually separate Nokia into distinct valuation components, assigning higher multiples to its fast-growing AI infrastructure business while discounting slower-growth legacy operations.

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