The ecosystem is vast. Why shouldn’t we get a little information about Nokia’s role already..?
Facts:
Nokia’s InP capacity will be very large, and it is located in the United States. As I understand it, from next year onwards, Nokia will have the largest capacity in the United States.
Nokia repeatedly highlights its own differentiation capability regarding PIC. So, Nokia has very broad-based expertise.
Is it just that the demand for optics is absolutely exploding through the roof, and Nvidia is reserving the entire industry’s capacity for itself? It is then difficult for competitors to respond to the situation when they have to “sell out of stock” (have nothing to sell).
Perhaps Nvidia’s money is now funding the production ramp-up of Nokia’s component competitors in the USA? At first glance, Nvidia’s investments in Lumentum and Coherent are negative for Nokia if they lead to increased competition and the rejection of Nokia’s optics in Nvidia’s own procurement.
Then again, as I’ve written before… there should be pretty much a 100% probability that there is a buyer for InP capacity. In that market, you should do well as long as you have capacity – as it is nearly running out.
So, I see it as possible that the price for that capacity just went up.
Is there much overlap between those and Nokia’s current production? Nvidia is certainly interested in the price and availability of components, so it is likely in its interest to create competition rather than be dependent on individual suppliers. The better the technology it gets at a sufficiently affordable price, the better for them.
Unfortunately, Nokia didn’t receive any other promises regarding data centers than “we’ll see if we can find some use for your products.” However, I believe use will be found in increasing amounts, but perhaps not as much and not with as high a margin as one would have hoped.
edit: Nokia is indeed investing 2.5 billion in R&D in the US, of which probably 1-1.5 billion will go toward Nvidia integration in radios and the rest into data centers. Nvidia has such a small stake in Nokia that it is unlikely to care how much profit Nokia makes, as long as it gets its gadgets integrated into mobile networks.
Coherent and Lumentum should indeed have InP (Indium Phosphide) expertise, and this overlaps with Nokia. However, Nokia will soon have very large manufacturing capacity in the United States, whereas Lumentum’s is elsewhere. I believe Coherent’s production is in the USA.
In my understanding, Nokia has broader optical chip expertise than either of those. Experts in the field can certainly come and evaluate this more closely.
However, the stock price seems to reveal that someone knows more, or interprets the situation as being positive for Nokia as well.
Here are some internal comments from Nokia gathered from various places. Everyone can make their own interpretations of them.
I personally suspect that optical demand will go through the roof over the next 5 years. And today’s announcement would confirm that. Nvidia is certainly strengthening and securing its positions.
But if Nvidia is now funding a massive production expansion for Lumentum and Coherent, then the total capacity could grow significantly and the price could drop to bargain levels after the initial scarcity.
Perhaps Nokia’s role going forward will be as an optical systems provider and, to some extent, a component supplier for companies other than Nvidia.
Hmmm… The market reaction indeed signals a more positive scenario than my negative interpretation. Hopefully the market is right!
The market is presumably pricing in the near future here. That investment will likely only start to be a bad thing in more than 3 years, provided that a larger portion of the investment is allocated to R&D and a smaller portion to production. And those companies don’t seem to overlap with Nokia in everything or even nearly everything, as @Lexus mentioned. There has been some nervousness in the market regarding the sustainability of the AI boom, and a future investment of that size might calm the worst bears.
Hotard has at least reminded us that Nokia is the only end-to-end connectivity provider in Western markets. Additionally, new partnerships are being formed constantly, as is already evident in the thread.
Perhaps this + the AI supercycle + Nokia’s unique position, commitment to developing networks for AI needs and by utilizing AI, is something that has not yet been comprehensively understood, as some still persist in imagining Nokia as just a radio vendor. I previously posted a message about my thoughts/beliefs regarding Mobile for the 2027-2032 period, but the message was apparently too long for the forum bot and it ended up in the trash.
However, things seem to be going well for us across a fairly broad front, and the markets are already perhaps even pricing in surprises for 2027.
I was thinking the same when it started nearing 7% in the green, but I don’t feel like paying taxes just yet, as I can’t predict this stock’s movements. Looking at the last 6 months or even a year, it’s been quite a rollercoaster, yet still trending upwards.
Nokia has plenty of other things going on besides entering the data center market. In my view, data centers have so far been just a positive upside that they will surely tap into to a significant degree, but for me, it’s mostly a nice extra compared to the potential in mobile over the next ~5-10 years.
Nokia has a strong position in some data center segments and a fairly seasoned R&D team, so they should do fine even if margins decline in certain product categories. Especially if we keep in mind that outside the US, there’s a market with 5-10x the population (depending on how you count it) elsewhere in the world, where you don’t necessarily have to push components manufactured in an expensive country; they can also be produced in a third country at a lower cost. The US focus on domestic production does put pressure on margins. R&D is global, though, and there are smart people working on it!
edit: It’s possible that at some point in the future, not everyone will want to rely solely on Nvidia. Nokia’s technology is fairly universal, and I believe their end-to-end solutions can be software-optimized to work with solutions from various different GPU manufacturers.
Coherent and Lumentum PEs at an average of 255 if Yahoo updates in real-time according to the share price, Nokia at 60 there, still a little ways to go
Ciena 400+
Maybe those MN AI announcements will also provide some extra momentum
I wouldn’t see Nvidia’s investments in Coherent and Lumentum as negative for Nokia. They likely reflect Nvidia’s strategy to maintain alternative component suppliers, and with its US-based InP Fabs, Nokia could become an overly strong optical systems supplier from Nvidia’s perspective. Lumentum and Coherent are strong in components and laser arrays, which Nvidia needs for CPO solutions within and between GPU racks. Nokia is traditionally strong in coherent optics and DCI connectivity, and now also in intra-DC optics following Infinera’s ICE-D.
One can also read between the lines that Nokia has a larger role in Nvidia’s CPO development than the component suppliers:
When the AI-RAN collaboration was announced, the companies stated the goal was to shift network computing to a GPU-based model, while also noting that traditional electrical switching within base stations is a bottleneck. The companies said they were developing a “common architecture” where optics and computing (GPU) are more tightly integrated to save power. This is the core definition of CPO technology.
Most of this development happens at the research level. Nokia Bell Labs has published several technical papers and given presentations (e.g., at OFC conferences) where it has presented silicon photonics-based CPO solutions. In connection with the Infinera acquisition (June 2024) and subsequent investor days, Nokia announced a strategy where their optical transponder technology (such as ICE-D and PSE-6s) is integrated into AI Data Center Fabric solutions. Nokia has named Nvidia’s Spectrum-X as a key ecosystem with which their networking equipment (SR Linux) must be compatible.
The February 2026 press release (Nokia RAN Digital Twin) states that the platform simulates “physical world phenomena” and “component placement.” This is strongly indicative of the technology’s use in CPO development as well.
This is my own guess. Further clarification will likely be provided at the GTC event. By the way, Nokia is now approx. 7.05 EUR on the NYSE
Of course, it can be tempting to sell something that has risen sharply. But in the end, it can be just as wrong as trying to catch a falling knife year after year.
Thanks for this, there have been some interesting discussions with AI about this evening’s events and tomorrow; it has risen to around €7.12 since that message, let’s see if it fades towards the evening or what !?! and if we can get that Gap closed tomorrow and continue
I almost put it into Suno since it seemed like a good rap beat, but it asked for my age so I didn’t bother. I’m putting quite a bit of faith in GTC, and it’s a good beat otherwise!
The last 6 months have been non-stop rocketing, but I’m still patiently waiting for that rocket to take off. Results are coming.
continue
I’m putting quite a bit of faith in GTC, and it’s a good beat otherwise! 