Nokia: A Forgotten Jewel Ready For Revaluation

In an era where artificial intelligence (AI) is reshaping industries and 5G infrastructure is becoming the backbone of global connectivity, Nokia (NOK) stands out as a misunderstood giant. Despite its pioneering role in AI-driven network optimization and its critical position in the $675 billion 5G infrastructure market, the company remains underappreciated by investors. This disconnect presents a compelling opportunity for those willing to look past the noise and focus on the fundamentals: Nokia's technological leadership, undervalued stock, and the sector tailwinds it now commands.

The AI-Driven Network Revolution: Nokia's Unsung Edge

Nokia's advancements in AI are not merely incremental—they are transformative. Its MX Industrial Edge (MXIE) platform and MantaRay AutoPilot system exemplify how the company is redefining network efficiency. For instance, in a partnership with Indosat Ooredoo Hutchison (IOH) in Indonesia, Nokia's AI-RAN technology slashed cooling energy consumption by 70%, reduced 2024 CAPEX by $10 million, and achieved 98% accuracy in traffic prediction. These systems dynamically manage resources, predict equipment failures, and allocate bandwidth in real time, all while operating across multi-vendor networks.

The MantaRay Service Management Orchestration (SMO), now at Level 4 autonomy (per the TM Forum's framework), automates network management with minimal human intervention. Such capabilities are critical as industries adopt AI video tools like Sora, which demand ultra-low latency and high bandwidth—needs that Nokia's infrastructure is uniquely positioned to meet.

5G Leadership in a Neglected Stock

While market attention fixates on flashy AI startups, Nokia's 5G infrastructure dominance is quietly cementing its future. The company holds a Champion and Market Momentum Leadership designation in Omdia's 2025 Private 5G Market Radar, a title shared by no other firm. By Q1 2025, Nokia had deployed 890 private 4G/5G networks globally, including collaborations with T-Mobile, Verizon, and Bharti Airtel. These partnerships underscore its role in pushing boundaries: in May 2025, Nokia helped T-Mobile set a world record for 5G uplink speed (550 Mbps) using AI-driven 5G Advanced technology.

Despite these achievements, Nokia's valuation lags behind peers. Trading at a P/E ratio of 12.5x (vs. Ericsson's 18x and the S&P 500's 24x), its stock is priced as if it's a relic of the past. Yet the 31.6% CAGR projected for the 5G market through 2034 suggests Nokia's earnings have ample room to grow.

Catalysts for Revaluation: Tailwinds and Triggers

Three catalysts could unlock Nokia's value:

1. 5G Rollouts and AI Video Demands: As platforms like Sora (which enables AI-powered video editing in the browser) gain traction, they will require robust, low-latency networks—precisely what Nokia's private 5G solutions provide.

2. Robofunds' AI Focus: Institutional investors deploying AI-driven strategies are increasingly prioritizing companies with scalable, data-centric infrastructure. Nokia's edge AI and network optimization tools align perfectly with this trend.

3. Energy Efficiency as a Competitive Moat: With 20–30% energy savings achievable through Nokia's AI tools, its solutions are becoming a necessity for operators under pressure to reduce carbon footprints and costs.

Risks and the Case for Caution

Nokia is not without risks. Geopolitical tensions, particularly around China's 5G policies, could disrupt supply chains. Competitors like Huawei and Ericsson also pose threats, though Nokia's partnerships (e.g., with Kyndryl and Siemens) and open RAN standards mitigate this.

Investment Thesis: Buy the Dip, Play the Trend

Nokia's stock is a contrarian play on undervalued tech leadership. With $12.5 billion in net cash and a 5% dividend yield, it offers both growth and stability. Investors should consider accumulating shares as the market digests its AI and 5G achievements. A price target of $4.50 (up from current ~$3.80) aligns with a 15x P/E multiple, still below peers.

Conclusion: The Network of the Future

Nokia's AI-powered 5G infrastructure is the unsung hero of the digital economy. As AI tools like Sora and enterprise automation demands surge, its edge computing and network optimization solutions will be indispensable. Investors who recognize this—and act before the market does—could reap significant rewards. In a world where connectivity and intelligence are the new oil, Nokia is the forgotten refinery.

Recommendation: Buy with a hold horizon of 1–3 years.