BofA Bets Nokia's Fiber-Optic Shopping Spree Makes It an AI Winner — But Can a Legacy Telecom Really Reinvent Itself?

Nokia Bets Its Future on Fiber Optics for AI — Can a €2.3 Billion Acquisition Justify a 56% Price Target Hike From BofA?

Shares surged as Bank of America upgraded Nokia to Buy on Monday, nearly doubling its price target to €10.70 ($12.40) from €6.87, arguing the Finnish telecom giant is quietly becoming an AI infrastructure play. Nokia stock has rallied ~11.6% in a week — from $8.85 on April 7 to $9.88 today — while the S&P 500 fell, a striking divergence that demands scrutiny.

• A $2.3 Billion Deal Reshapes Nokia's Revenue Mix. Nokia completed its €2.19 billion ($2.3 billion) acquisition of Infinera in February 2025 , and the results are already visible. The expanded Optical Networks business posted 15% net sales growth in Q1 2025 with several hyperscaler design wins.

Jefferies forecasts 26% Optical Networks growth in 2026 — the kind of trajectory that forced BofA to abandon its old valuation method entirely.

• BofA Is Valuing Nokia Like Two Different Companies. Analysts led by Oliver Wong switched to a sum-of-the-parts model, applying a 30x multiple on 2027 estimated operating profit for Nokia's Optical and IP Networks business and just 10x for everything else. That split tells you the bet: Nokia's optical arm is being priced like a growth stock, while mobile networks — still the biggest segment — is valued like legacy equipment. BofA's earnings estimates run 13–15% above consensus for 2026–2028.

• A New CEO From Intel's AI Division Signals Where Nokia Is Headed. Justin Hotard, who took over as CEO in April 2025, came directly from Intel where he ran the Data Center & AI Group.

Nokia also secured a $1 billion partnership with Nvidia in Q4 2025 , though BofA isn't modeling significant near-term revenue from that deal. The strategic direction is clear: Nokia wants to sell the plumbing for AI data centers, not just phone towers.

• The Bull Case Has Real Gaps. Nokia targets €200 million in cost savings from the Infinera deal by 2027, ramping gradually. But Q4 2025 earnings missed expectations — EPS of $0.16 versus the $0.17 forecast, with revenue of €6.13 billion falling short of the €7.1 billion estimate.

Further upside from replacing Huawei and ZTE in Europe is not in BofA's base case — meaning the thesis requires optical growth alone to justify the stock's current run near its 52-week high. Nokia reports Q1 2026 earnings on April 23; that's the next real test.