Nokia (NOK) Stock Rises as Bank of America Makes Major Bet on Its AI Data Center Pivot

TLDR

• Bank of America raised Nokia’s rating to Buy from Neutral, hiking its price target to €10.70 from the previous €6.87.
• Nokia shares gained almost 2% on the Helsinki market right after the upgrade announcement was made public.
• This rating upgrade is fueled by Nokia’s expanding optical networking division and rising demand for AI data center solutions.
• BofA projects that Nokia’s Optical Networks business unit will post a 17% compound annual growth rate through 2028.
• BofA’s earnings per share projections for 2026 to 2028 are 13 to 15 percent higher than the broader Wall Street consensus.

(SeaPRwire) –   Nokia shares ticked up on Monday after Bank of America lifted the Finnish telecom equipment manufacturer’s rating to Buy, citing its expanding optical networking business and growing demand from hyperscalers constructing AI infrastructure.

Nokia Oyj, ticker symbol NOK

The upgrade was led by BofA analyst Oliver Wong, who raised Nokia’s price target from €6.87 to €10.70, marking a 56% increase in the forecasted price. By midday GMT, Nokia shares had risen almost 2% during Helsinki trading sessions.

The bank also adjusted its valuation approach, shifting from the EV/EBITDA metric to a sum-of-the-parts model. It assigned a 30x multiple to the projected 2027 EBIT of Nokia’s Optical and IP Networks business, and a 10x multiple to all other segments of the company.

Nokia’s 2025 purchase of Infinera is a core part of BofA’s investment thesis. The acquisition gave Nokia greater access to U.S. cloud clients, and BofA considers it a pivotal moment for the company’s market positioning.

Nokia’s Optical Networks division is expected to record a 17% compound annual growth rate through 2028. BofA notes growing demand for optical systems and an anticipated boom in coherent pluggable revenue as the industry transitions from 400G to 800G speeds.

Wong’s research team characterized Nokia as “evolving into an optical industry leader with a unique European edge.” They believe the company’s internal 10–12% growth forecast for its Optical and IP Networks units is conservative, and anticipate Nokia will exceed that guidance and raise its future projections.

IP Networks and European Data Centers

For the IP Networks segment, BofA expects Nokia to gain market share in European data center switching, supported by its partnership with NScale, a neocloud provider that specializes in the European market.

The bank forecasts that Nokia could generate €226 million in data center switching revenue in 2026, with that figure rising to €407 million by 2028.

Mobile Infrastructure remains Nokia’s biggest revenue-generating segment. BofA predicts operating margins for this unit will grow from 13.4% in 2025 to 17.8% by 2028, fueled by portfolio streamlining and an increased focus on software offerings.

Nvidia Partnership and Huawei Upside

Nokia’s collaboration with Nvidia adds another positive dimension to its growth outlook. Nvidia poured $1 billion into Nokia in October 2025, with the investment earmarked for AI-RAN use cases. BofA does not expect significant near-term revenue from this partnership, but notes it is a strong positive for the company’s long-term prospects.

Potential replacement of Huawei and ZTE equipment across Europe is also not included in BofA’s base case projections — but it represents a significant upside opportunity if regulatory or political trends continue to push European carriers away from Chinese equipment providers.

BofA’s earnings per share projections for 2026 through 2028 are 13–15% higher than the broader Wall Street consensus. According to BofA, this gap indicates that the market has not yet fully accounted for Nokia’s strategic shift toward optical networking.

Jefferies also maintains a Buy rating on Nokia, with a price target of €8.80 that was released in a report published on April 8.