I glanced through Inderes’ latest analysis, and I see the following matter quite differently.
Nokia stated the following regarding AI target market growth assumptions in connection with its Q1 report: “We now expect the target market for our AI and cloud customers to grow at an annual rate of 27% (2025–2028), compared to the 16% we estimated in November.”
I would venture to say that since the spring, forecasts certainly haven’t decreased—most likely the opposite. This is, for instance, because Lumentum stated the following regarding the InP shortage in early October: “is unable to meet about 70% of demand for some products through next year”. On the eve of summer, that same figure was reported to be over 30%. Growth expectations in the market have therefore accelerated.
Nokia also estimated the following at the OCP Global Summit 2026: “Based on customer feedback, the volume demand for InP components is estimated to grow 10-fold by 2030.”
From today’s perspective, the addressable markets are set to grow extremely aggressively over the coming years. On top of everything, this is easy to believe, as the conversion of data centers to optical is only just beginning because copper has reached its performance limits at distances beyond about 2 meters. In addition, the scale-across market is exploding.
Inderes does expect growth in both Optical and IP markets in the coming years, but their forecasts are based on the premise that current demand and order backlog are pent-up, which will then eventually unwind. Their assumption is that AI & Cloud orders will peak this year at €6,454M, dropping from there to, for example, €5,600M next year in 2027. And after that, the figures were €6,000M (year 2028) and €6,400M (year 2029).
It is true that target market size is not evaluated solely through order intake. Regardless, I assume these correlate strongly. Therefore, if you reflect on this through the spring forecast, assuming that orders this year are an amount of X, by 2029 they should be 1.27^3x, or 2.05X. This calculation exercise implies that Nokia could achieve over 13 billion euros in AI orders in 2029.
Since lead times exist—which are apparently now in the range of 12–18 months for optical products—this naturally won’t unfold so linearly. Regardless, in my opinion, future market growth is currently being underestimated by Inderes. For 2027, they dared to apply the multiples because Nokia provided guidance, and the order backlog is filling up. But after that, growth would ostensibly stall.
Nokia and other market participants are currently stating that the market is growing aggressively, as we will witness the world transitioning to optical. Through Inderes’ current analysis, Nokia would simply capture none of this future growth and instead remain at their current market position. Personally, I see that growth rates for both the optical and IP businesses will remain extremely high on a YoY basis (25–40%) throughout the coming years—not just in 2027.
So, I strongly disagree here. And I want to challenge this, so I’m also tagging the current analyst in this post. Ping @Tommi_Saarinen