Nokia as an investment (Part 4)

Stocks
1021

Could you elaborate a bit more on what you mean by this? And filler characters.

Edit: And then, to change the subject.

Something else came to mind regarding Jensen being in the spotlight. In recent months, he has also been boosting things like the SpaceX IPO. I believe the company might eventually turn out to be a success, but I don’t think this will be a success for investors for years to come (I could be wrong, of course). However, it is strange how even in his (Jensen’s) case, this is compared to the IPOs of Amazon and Google—the price tags are in a completely different league. In my opinion, the meat has already been picked off the bone—euphoria is what allows for this kind of listing now.

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1022

Valuations seem to move in waves. Roughly like this, for example:

AI chips - memory - photonics - networking - AI infra/data centers - etc.

I have personally tried to follow these “waves.” For example, NVIDIA, MU, etc., have already been sold, while AVGO is still in the portfolio. Data centers like IREN and CIFR are also still held.

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1023

AI is making telecom more expensive, warn Ericsson and Nokia

https://www.lightreading.com/5g/ai-is-making-telecom-more-expensive-warn-ericsson-and-nokia

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1024

Let’s post the full text translated, as Nordea’s assessment of Nokia has turned significantly more positive in one fell swoop.

NOKIA: STRONG GROWTH ENVIRONMENT, LIKELY TO EXCEED 2028 TARGET – NORDEA

STOCKHOLM (Nyhetsbyrån Direkt) – Growing demand for AI computing and high-performance network connectivity benefits Nokia in many ways, Nordea states in a new analysis.

“In light of this exceptionally strong growth environment, Nokia’s target to achieve a comparable operating profit of EUR 2.7–3.2 billion in 2028 looks increasingly cautious,” the bank writes. Nordea’s own estimate for 2028 is a comparable operating profit of EUR 3.54 billion, representing approximately 20 percent average annual earnings growth from 2025 levels.

Growth in Nokia’s Optical Networks business has already accelerated into double digits, driven by 800G optical modules used for data center interconnects. Furthermore, the bank sees new growth opportunities within data centers from 2027 onwards, as optical solutions begin to replace copper-based connections.

Nordea also believes that Nokia’s recent IP Networks design wins with hyperscale cloud providers indicate the company is seriously emerging as a credible competitor alongside Arista Networks and Cisco Systems in data center switching.

“Sales in this area could nearly triple in 2026, which is expected to start accelerating growth as early as the second quarter,” the bank writes.

Additionally, Nordea estimates that from 2028 onwards, AI-RAN could serve as a driver for market share growth and improved gross margins in Nokia’s Radio Networks business.

“In addition to the acceleration of organic growth, development is supported by synergies from the Infinera acquisition, additional cost savings, a more profitable product mix, and the divestment of less attractive business operations,” the analysis states.

Nordea has raised its target price for Nokia to EUR 15.70 from the previous EUR 10.50 and reiterates a Buy recommendation for the stock.

“Based on our data center-focused theme report, the 2026 investment budget increases from Alphabet and Meta Platforms, and positive industry signals seen during the earnings season (including from Cisco Systems, Lumentum Holdings, Arista Networks, and Hewlett Packard Enterprise), we are raising our comparable EBIT forecast for Nokia by 2 percent for 2026 and by 5–6 percent for 2027–2028,” the bank writes.

Nordea’s earnings forecasts for Nokia for the years 2026–2028 are 4–6 percent higher than consensus estimates, according to Infront data.

“We also see the possibility of Nokia raising its own outlook for 2026 and 2028, which could further support the stock despite the recent rise in valuation levels,” the bank states.

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1025

LR is so proving my point here… What an absolute waste of column space and for the reader, time!

On the hand, you could take a look into what that that brings to the table for Nokia and forget about Ericsson’s squeezing margins…

https://x.com/i/status/2061880034348917068

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1026

Jensen Huang on the NVIDIA-Nokia Collaboration

JP Insights is apparently referring to the media session at the Computex 2026 event held in Taipei, Taiwan on June 1st.

$NOK did you hear that Jensen mentioned Nokia directly during his Q&A? His argument was that the base station today is mostly dumb, and that it should eventually get smart enough to adjust beams, signals, traffic and workloads on the fly, which would lift spectral efficiency and cut energy use. Then he added that $NVDA has a big partnership with Nokia to do exactly that.

Interesting times.

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1027

Nokia: Northland Raises Price Target to $20 from $13

Northland analyst Tim Savageaux raised the price target for Nokia (NOK) to $20 from the previous $13 and maintained an “Outperform” rating on the stock. Yesterday’s statements from Nvidia’s CEO brought strength to Marvell (MRVL), which, combined with HPE’s (HPE) continued strong AI data center results and Alphabet’s (GOOG) (GOOGL) capex spending, “bodes well for the sector,” says the analyst. He raised price targets for several communications technology companies after receiving further indications of both a short-term acceleration in AI-related optical demand and the beginning of a sustainable, multi-year cycle.

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1028

Absolutely incredible. Back in February, you could still get the stock for under €6. Now it’s almost €15. Why couldn’t the market have started pricing this in a bit earlier with a steadier climb? Oh well, great to see it going up. Hope EPS catches up at some point too :smiling_face_with_sunglasses:.

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1029

It is also remarkable how lukewarm the reaction on this forum is in terms of comments, despite these massive target price hikes (Nordea and Northland). It seems people have either become numb to the success, or ownership has already slipped away from Finnish retail investors to foreign hands…

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1030

Yeah, definitely more enthusiasm over on KL! From what I’ve noticed, they get a bit sentimental too, lol. It’s difficult to find a decent balance, but i think on the whole It’s a bit of a conflicting situation for many, especially when you take into account the Finnish media scepticism and Nokia’s historical decline into almost oblivion. Personally I’ve held quite a strong bullish view this past 12 months, so I fully expect to see these revised upgrades keep on coming!

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1031

There are significant upward revisions in price targets from various analysts, but that in itself doesn’t change much, at least for me. Nokia forecasts a comparable operating profit between 2.7 and 3.2 billion euros by 2028. When/if Nokia starts to adjust this upwards, then it will, of course, be very positive.

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1033

A bit more AI hype.

Perhaps many have already listened to this Sijoituskästi episode, where Tero Ojanperä was a guest.

Tero was at Nokia for over 20 years. During his career, he served as Nokia’s Chief Technology and Strategy Officer, head of the Nokia Research Center, and head of Nokia Networks, among numerous other roles. Additionally, he was one of the founders of the AI company Silo AI, which AMD acquired in 2024.

I’ll highlight one point (starting at the 10:00 mark) that reinforced my own decision to sit on my current Nokia shares for a long time to come. I believe Nokia will benefit tremendously if we move toward artificial superintelligence.

Abbreviated and in my own words, it went something like this: How significant is AI when compared to major innovations in human history? We might not really know yet, but a massive leap has been made, and at some point, development may plateau and go no further. In that case, AI could be compared to the invention of the steam engine. Or is it that we are heading toward superintelligence, in which case it ranks alongside the discovery of fire.

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1034

It’s not just that I lack the expertise to participate in the thread’s discussion, but one doesn’t even dare to admire this momentum because, in typical Finnish fashion, there’s a constant fear in the back of one’s mind that the whole AI circus will soon be flushed down the toilet. It couldn’t possibly be (could it?) that we in Finland actually get to enjoy a piece of this action for a longer period.

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This is the kind of circus that will drastically transform societies and people’s job descriptions. Once it has gained momentum, it is difficult to stop or avoid participating in. Many jobs will end or change; someone has to pay for this. And since the costs are massive, so too will be the changes. Indeed, this will also involve total malinvestments and financial failures. Right now, everything that can be associated with AI has momentarily taken off. Nothing is a money-printing machine, and there will be plenty of cold sweats ahead. I see Nokia’s situation as positive due to its diverse and expanding offering and expertise. Compared to its US peers, Nokia is still very cheap. Markets fluctuate, but I believe that in a couple of years, Nokia will be at least a 25-euro stock.

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1037

The market is currently in a state of euphoria, with high expectations for a massive spending rally in the creation of the AI ecosystem. Accordingly, revenue and operating profit forecasts for companies are rising sharply; in other words, the market is now pricing in a perfect future scenario. Some argue that on an earnings basis, certain companies like Nvidia are not expensive, while other semiconductor firms—into which category Nokia can now also be placed—look very expensive. The market is now treating the future ‘E’ (the earnings component) in forecasts as a certainty—predicting that projected results will be met with 100% certainty. AI is coming, data centers must be built, and this cannot go wrong—or can it?

In my opinion, everything starts with Nvidia. Over 60% of Nvidia’s revenue comes from three different hyperscalers who are currently spending more than their own cash flow allows. Furthermore, some customers are entities that don’t generate any profit yet; instead, Nvidia effectively finances the purchases and records the sales as its own revenue. One doesn’t need to be a genius to realize that many things could still go wrong in this setup.

I believe that a massive number of data centers will be built, and AI will permanently change the world. However, I think it is still uncertain at what speed everything will ultimately materialize and to what extent. The development of AI models will also play a role in determining how much capacity is needed. It’s possible that the current pricing regarding future capacity needs is correct and valid, or perhaps it isn’t.

And all of this will most likely be tested by rising inflation and interest rates. If cash flow isn’t sufficient for investments, who will pay for them? I think everyone should keep in mind that in the current situation, you shouldn’t really take anyone’s word for it. For example, it is extremely important for Jensen Huang to maintain the hype and the idea of first-mover advantage—if people start doubting it, investments will drop.

Narratives are driving the market now, not earnings.

Edit:

I forgot to mention that the upcoming record-breaking IPOs will test the markets. Those billions will leave the market from somewhere else, but from where? Nvidia, Broadcom…

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1038

Certainly true, but Nokia is also quite a unique company with its integration of the entire product-service chain, and it’s possible we have a “chance of a lifetime” on our hands for a second time—just as Nokia was in its starting blocks back in 1997-1998. Of course, in Finland, the “Nokia always disappoints” euphoria and memories of past decades are kept very much alive, and the stock rise we’ve seen comes purely from the insights of Wall Street—not from Finnish investors or analysts. The “industrial information” related to AI and the data revolution—who knows what, what they know, and who has the potential—is over there, not in Finland. That $100 billion Market Cap is now pulling Nokia like a magnet, and there’s no stopping it; that point is a watershed moment in the States—if the company meets investor expectations and proves to be an existential player, then the sky is the limit. This is a phenomenon seen on Wall Street throughout the ages.

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1039

I think it’s new territory for us all, as we saw in the NYSE aftermarket yesterday

AVGO (Broadcom) is a 2 trillion stock, so everything needs to be perfect. It’s forward outlook (including software sales) didn’t quite hit the mark, subsequently triggering a wider sell off. Therefore the forward PE is too high in this scenario. The sell off was people taking the profit, as it had risen sharply during the week preceding earnings. This consequently, in such a valuable stock, can cause massive ripples.

Maybe there is a market reshaping happening for those upcoming IPOs, as you are hinting at. It seems there is a threshold for companies like Broadcom. Nvidia too, although I believe it’s not entirely in the same scenario. These new IPOs come at a time when Nvidia can’t raise it’s own market cap, despite the numbers telling a different story. This all points to a lot of uncharted territory we’re in, but ultimately companies profits are out running the AI transition. The market will only be transformed once industry as a whole is. What happens in the interim is what we witnessed after the bell yesterday. Hold on to your hats!

Nokia too was hit and was trading today up to 8% lower. Personally I believe the hit to Nokia (which was doing ok until the sell off spiralled and became wider spread) was probably due to Nokia being in a stage of transition and the trigger was the uncertainty surrounding that, especially taking into account it’s recent rally. But still, 8% is a big hit! This is new territory in my opinion and Nokia is still in a stage of AI infancy. Saying that, I do believe Nokia is also a very unique company with a diverse offering, that will help it shield itself from these effects, once it becomes more established.

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1040

The article is behind a paywall, but the headline contains the essential information:

Activity among Nokia insiders: Large share purchases

Several insiders heavily loaded up on Nokia’s surging stock in May. Insiders were already on the buying side in April.

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1041

Ciena’s results didn’t surprise/disappoint, but it might not be enough for the market. The most concerning part from their perspective is that H1 revenue is $3bn and they forecast full-year revenue to be $6.3bn (±$100m) → does this show that full capacity has been sold? Does this open up an opportunity for Nokia, for example, to increase sales?

webcast 15:30 Finnish time Events Platform - Q4

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1042

The combined capital expenditures of hyperscalers this year: approximately 725 billion USD. It’s also worth noting Alphabet’s financing solution:

  • Operating cash flow: 174 billion USD
  • Capital expenditures (CapEx): up to 190 billion USD and “significantly more” next year (speculated range between 250-300 billion USD)
  • Equity offering: 85 billion USD, with Berkshire Hathaway participating with 10 billion

Alphabet is not trying to slow down AI investments; instead, it is clearly increasing them for next year while ensuring their financing without excessive debt.

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