Infinera acquisition and Nvidia stake accelerate optical networking push
Nokia sells equipment and software that functions as logistics and delivery infrastructure for artificial intelligence — switches that connect servers inside data centers and routers that direct data traffic between them. In the analogy the company offers, the thousands of miles of fiber cable running through a data center are the roads; Nokia’s products are the trucks and sorting centers that move data where it needs to go.
The Finnish company, which no longer manufactures the candy-bar cellphones it was once known for, has seen its stock rise roughly 90 percent so far in 2026, according to the Wall Street Journal, as investors recast the firm as an AI infrastructure play with a lingering mobile network business attached.
Chief Executive Justin Hotard, who took over last year after running Intel’s data center and AI division, described Nokia’s offerings as “the backbone of the AI economy.” The company is benefiting as hyperscalers including OpenAI, Meta Platforms, and Alphabet race to build out data center capacity.
The Infinera deal and the Nvidia bet
The strategy took shape under former CEO Pekka Lundmark, who orchestrated Nokia’s $2.3 billion acquisition of Infinera, an optical networking technology maker specializing in the lasers, receivers, and chips that haul data at scale. The deal accelerated a dramatic expansion of Nokia’s North American footprint: the company’s optical network market share in the region grew to 27.3 percent in 2025, up from 6.3 percent a year earlier, according to Ian Redpath, a research director at advisory firm Omdia. That placed Nokia solidly in second place behind Ciena, which leads with 50.1 percent market share, Redpath said.
Nokia received a further boost in October when Nvidia bought a 2.9 percent stake in the company for $1 billion as part of a broader agreement to collaborate on product development. Following a strong first fiscal quarter for the unit that includes optical networks, Nokia nearly doubled its full-year growth guidance, projecting 18 to 20 percent growth.
Hotard has brought other Silicon Valley veterans into Nokia’s C-suite to help scale the AI infrastructure business, according to the Journal.
A corporate metamorphosis with deep roots
Corporate reinvention is a recurring feature of Nokia’s history. Founded in 1865 as a ground wood pulp mill on the banks of Finland’s Nokianvirta River, the company evolved through rubber and cable manufacturing before becoming a global leader in mobile handsets. Nokia’s market capitalization peaked above $250 billion during the dot-com bubble in 2000.
The company sold its handset business to Microsoft in 2014 and continues to license the Nokia name to a phone manufacturer. Nokia shifted its focus to mobile infrastructure — selling cell-tower equipment and network software to telecom service providers. That business still accounts for a little more than half of Nokia’s revenue, but the unit has been in decline as mobile carriers largely finish deploying fifth-generation networks.
Risks of riding the AI wave
The pivot carries material risks. Competitors are competing for the same components Nokia needs, creating supply shortages. Hotard said in April that Nokia faces long lead times for some components and is exploring ways to secure supply and control costs as semiconductor prices rise.
“Long lead times are a risk. If those lead times get unpredictable, then their revenue gets unpredictable,” Redpath of Omdia said.
Nokia is now subject to the same market volatility that affirms and erases value across the AI sector, as investors weigh companies’ escalating capital expenditures against uncertain monetization timelines and the potential effect of higher interest rates on the debt-fueled data center build-out.
Daryl Schoolar, an analyst and director at telecom research firm Recon Analytics, said Nokia’s stock is “basking in the glow of the AI halo,” but its momentum “relies on the success of AI itself — which is not 100% guaranteed.”
Amanda Lyons, head of research at Energy Group Capital, said Nokia has not yet demonstrated it can achieve the margins the market expects of an AI-focused company. “The market is now waiting for the earnings to catch up to the story,” she said.