Nokia's Optical Networks Boom Drives 150% Surge as AI Cloud Orders Hit €1 Billion

Nokia has undergone one of the most dramatic re-ratings in European technology this year, with its shares nearly quadrupling from a 52-week low of €3.49 to close at €13.94 in Helsinki. The catalyst? A sweeping narrative shift from legacy telecom equipment maker to an infrastructure beneficiary of the artificial intelligence buildout — a theme that gathered pace after Bloomberg in late May grouped Nokia alongside Dell, Lenovo, Cisco, Intel, Micron and Texas Instruments as "legacy" tech winners riding the AI capital expenditure wave.

The classification sent Nokia's stock up more than 8% on the day to €13.79, just 2.4% shy of its 52-week high of €14.14 set on May 26. Year to date, the Finnish company has gained roughly 150%, placing it fourth in the Stoxx Europe 600 and adding 124% to its market value. Yet for all that momentum, the shares still trade 80% below their dot-com-era peak — a gap that underscores why many investors view Nokia as a relatively cheap entry point into the AI infrastructure story.

The fundamental engine behind the rally is a dramatic acceleration in optical networking and cloud-related revenue. In its first-quarter 2026 report on April 23, Nokia posted comparable sales growth of 4% year on year on a constant-currency, constant-portfolio basis. Within that, the Optical Networks segment jumped 20%, and revenue from AI and cloud customers surged 49%. The comparable gross margin climbed to 45.5%, up 320 basis points from a year earlier, while comparable operating profit rose to €281 million from €183 million.

Perhaps the most striking figure was the order book: Nokia recorded €1 billion in orders from AI and cloud clients during the quarter. That order flow underpins management's revised outlook for the addressable AI and cloud market, which the company now expects to expand at a compound annual rate of 27% through 2028 — a sharp upgrade from the 16% forecast issued last November.

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The Infinera acquisition, completed on February 28, 2025, adds further weight to the optical strategy. Nokia aims to become a heavyweight in the optical networking space, particularly among webscale customers, and is targeting more than €200 million in comparable operating profit synergies by 2027. The company confirmed that the transaction already contributed positively to comparable operating profit and earnings per share in 2025.

For the full fiscal year 2026, Nokia has set ambitious targets: comparable operating profit between €2.0 billion and €2.5 billion, Network Infrastructure growth of 12% to 14%, and a combined 18% to 20% expansion in IP and Optical Networks. The comparable operating margin for that segment is expected to improve to between 25% and 28%.

Technically, the rally shows few signs of overheating. The relative strength index stands at 64, not yet in overbought territory, but the annualized 30-day volatility of around 77% signals that the market is still actively repricing the stock. Nokia now trades more than 40% above its 50-day moving average and roughly 113% above its 200-day average — a stretched position that leaves it vulnerable to any earnings disappointment.

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That makes the July 23 release of second-quarter and first-half results the next critical test. Investors will scrutinise whether the €1 billion in AI and cloud orders from the first quarter translates into sustained revenue growth and whether the optical networking investments are starting to deliver operating leverage. If incoming orders confirm that the Q1 momentum was no one-off event, the re-rating could gain a firmer foundation. If not, the wide gap to the 200-day moving average will quickly become a focus once more.

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