Bank of America upgraded Nokia to Buy after the company beat fourth‑quarter expectations, saying the Finnish group is pivoting into optical networks and data‑centre switching following the Infinera deal. Nokia posted Q4 revenue of €6.13bn and comparable operating profit of €882m, while net income fell to €544m on higher costs; full‑year 2025 revenues were €19.88bn.

Quarterly numbers and what moved the needle Nokia reported quarterly net sales of €6.13bn, up 2% from €5.98bn a year earlier, with growth in Network Infrastructure leading the improvement. Comparable operating profit in the quarter came to €882m, while reported net income was €544m, down on the prior year as operating costs rose. For the full year 2025 Nokia recorded revenues of €19.88bn, an increase of 3% from 2024. Network Infrastructure net sales were €2.4bn in the quarter, up from €2.03bn a year earlier. Mobile Networks produced €2.5bn of sales, roughly flat on a reported basis but up 6% on a constant‑currency basis, helped by demand in the Middle East, Africa and parts of APAC. Not all segments moved in the same direction. Cloud and Network Services fell to €837m in net sales, down 11% on a reported basis and 4% on a constant‑currency basis, with weakness centred in Core Networks. Nokia Technologies also saw revenues ease to €384m from €463m in the year‑ago quarter. Regionally, EMEA posted stronger sales, with healthy traction in Network Infrastructure and Mobile Networks. North America and India showed pockets of strength; Latin America and some APAC markets lagged. Optical networks: the growth engine The quarter showed particular strength in Optical Networks, which recorded double‑digit growth on a constant‑currency basis. Nokia said optical demand was robust across North America, Europe, the Middle East and Africa, where hyperscalers and cloud customers are upgrading capacity and shifting to higher‑speed coherent pluggables. Bank of America made optical the centrepiece of its upgrade. Oliver Wong, Bank of America analyst, raised Nokia to Buy and increased his price target to €10.70, arguing the company is gaining share as hyperscalers accelerate investment in AI infrastructure. The bank models a high‑growth trajectory for Optical and IP Networks and applied a 30x multiple to 2027 estimated EBIT for that business in its sum‑of‑the‑parts valuation. That conviction rests partly on strategic transactions. Wong's team highlighted Nokia’s 2025 acquisition of Infinera as providing deeper access to US cloud customers and a broader optical product set. Bank of America forecasts the Optical Networks segment could grow at about a 17% compound annual rate through 2028, a rate well ahead of Nokia’s own 10–12% guidance for the division. Data‑centre switching and IP gains Beyond optical kit, Bank of America models rising revenue from data‑centre switching. The bank estimates Nokia could generate roughly €226m of switching revenue in 2026, rising to about €407m by 2028 as European cloud operators scale and Nokia leverages partnerships such as NScale in the region. IP Networks showed modest gains in the quarter, with a 3% constant‑currency lift year‑on‑year thanks to demand in North America, the Middle East and Africa. Those gains matter because coherent optical transport and data‑centre switching sit alongside IP routing as the stack hyperscalers upgrade for AI workloads. Strategic deals and partnerships supporting recurring revenue Commercial wins from the most recent quarter and the months since help explain why analysts are upbeat. Nokia supplied broadband expansion work with Altafiber in the US, and the company was selected by Proximus for a network core upgrade. Nokia also launched a 5G Core SaaS with Citymesh. If Nokia can convert the recent wins into durable share gains with hyperscalers and European cloud customers, it would show that network‑equipment vendors can capture a larger slice of AI‑driven infrastructure spending — a shift that could reshape competition and margins across the sector.

Related Articles

The next specific milestone is 2026 switching revenue: Bank of America models roughly €226m that year and about €407m by 2028 — a concrete yardstick of whether Nokia can convert quarterly wins into sustained share gains.

This article was created with AI assistance.