Finnish network infrastructure company Nokia Oyj (NOK) has announced that it will work with the Trump administration to invest $4 billion to expand R&D and manufacturing in the U.S. This is in addition to Nokia’s $2.3 billion investment in U.S. manufacturing as part of its acquisition of Infinera. The investment is expected to strengthen the company’s artificial intelligence (AI) optimized network solutions in the country.
In light of this development, we take a deeper look at Nokia.
Nokia Oyj specializes in network infrastructure, cloud services and technology licensing. Provides global mobile, fixed and cloud-based network solutions, including IP routing, optical and 5G networks. The company also develops software for automation, security and network management, while licensing patents and innovations to other technology companies.
Headquartered in Espoo, Finland, Nokia supports extensive research and development efforts around the world, focusing on the advancement of networking and telecommunications technologies. The company’s strategic efforts aim to lead network transformation driven by AI and 6G, ensuring sustainable growth and innovation. The company has a market capitalization of almost $34 billion.
Positive market sentiment has boosted the performance of Nokia shares on Wall Street. In the last 52 weeks, the stock has gained 43.71%, while in the last three months it has risen 39.4%. On October 28, the stock hit a 52-week high of $8.19, but is down 35.15% from that level.
Shares rose after NVIDIA (NVDA) took a $1 billion equity stake in the company. In addition to the capital injection, NVIDIA and Nokia also partnered to integrate Nokia’s networking technologies with NVIDIA’s robust chip architecture.
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Additionally, Nokia is trading at a cheap valuation. Its price-to-sales ratio of 1.37 times is lower than the industry average of 3.20 times.
For the third quarter of fiscal 2025, Nokia reported adjusted net sales of 4.83 billion euros ($5.56 billion), an increase of 12% year-on-year. This was also higher than the net sales of 4.6 billion euros ($5.3 billion) that one forecast had predicted.
The revenue growth was mainly driven by Nokia’s network infrastructure revenue, which increased 28% from the previous year’s value to €1.95 billion ($2.25 billion). On the other hand, the company’s mobile network net sales decreased modestly by 1% year-on-year to €1.84 billion ($2.12 billion).
The profitability trajectory showed some weakness, as Nokia’s adjusted gross margin fell 150 basis points year-on-year to 44.2%. The company’s adjusted operating profit decreased 10% from the prior-year period to 435 million euros ($500.76 million), but this was higher than Bloomberg’s estimate of 324.20 million euros ($373.20 million). Adjusted EPS remained stable annually at 0.06 euros.
Following a strategic review, Nokia decided to reduce its passive risk investments as they do not align with the company’s strategy. As a result of this change, Nokia’s comparable operating profit guidance for fiscal 2025 changed from a range of €1.6 billion ($1.84 billion) – €2.1 billion ($2.42 billion) to a range of €1.7 billion ($1.96 billion) – €2.2 billion ($2.53 billion).
Wall Street analysts have a mixed view on Nokia’s earnings trajectory. For the current fiscal year, its EPS is expected to fall 25.6% year-over-year to $0.32. On the other hand, for fiscal 2026, the company’s EPS is projected to increase 25% annually to $0.40.
In October, analysts at Jefferies upgraded Nokia stock from “Hold” to “Buy,” citing the company’s increased exposure to demand for AI-powered data centers. Jefferies analysts believe Nokia is moving from a business predominantly focused on radio access to one with greater exposure to AI. The brokerage also expects Nokia’s gross margin to grow to 45% in 2026 and 46% in 2027.
In the same month, JPMorgan analysts, led by Sandeep Deshpande, maintained an “overweight” rating on Nokia shares and raised the price target from $6 to $7.10, reflecting continued confidence in the company’s stock.
Nokia has become quite popular on Wall Street, with analysts generally giving it a consensus rating of “Moderate Buy.” Of the 14 analysts who have rated the stock, seven analysts have given it a “Strong Buy” rating, one analyst has rated it a “Moderate Buy”, three analysts are playing it safe with a “Hold” rating, while three have recommended a “Strong Sell” rating. The consensus price target of $6.58 represents an 8.58% upside from current levels. The Street’s high price target of $8.50 indicates an upside of 40.26%.
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As of the date of publication, Anushka Dutta had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
