Bank of America (BofA) upgraded Finnish telecom equipment giant Nokia (NOK) from Neutral to Buy, significantly raising its price target from €6.87 to €10.70, a 56% increase. The upgrade, led by analyst Oliver Wong, triggered a nearly 2% rise in Nokia's stock in Helsinki trading.
The bank's bullish stance is driven by Nokia's strategic pivot towards optical networking and AI data center infrastructure. BofA forecasts Nokia's Optical Networks segment to grow at a 17% compound annual growth rate (CAGR) through 2028, fueled by rising demand from hyperscalers like Microsoft, Amazon, and Google building out AI infrastructure. The bank also switched its valuation method to a sum-of-the-parts model, applying a 30x multiple on 2027 estimated EBIT for the Optical and IP Networks business.
A central pillar of the thesis is Nokia's 2025 acquisition of Infinera, which BofA describes as the "missing piece of the puzzle." The deal provided Nokia with deeper exposure to U.S. cloud customers and high-end optical technology, transforming the company from a "5G laggard" into a dominant force in internet infrastructure.
On the IP Networks side, BofA sees Nokia gaining ground in European data center switching, aided by a partnership with neocloud operator NScale. The bank estimates related revenue could reach €226 million in 2026, growing to €407 million by 2028.
BofA also highlighted Nokia's $1 billion partnership with Nvidia, focused on AI-RAN (Radio Access Network) technology, as a significant long-term catalyst that validates Nokia's technical prowess. Furthermore, the bank notes a geopolitical tailwind, as European nations tighten restrictions on Chinese vendors Huawei and ZTE, positioning Nokia as a "Trusted Partner" for sovereign-grade infrastructure replacement cycles.
BofA's 2026–2028 earnings per share (EPS) estimates are 13–15% above Street consensus, suggesting the market has not fully priced in Nokia's optical pivot.
