Nokia (NOK): A Hidden Growth Play in AI-Driven Networking and 5G Expansion

In an era where artificial intelligence (AI) and 5G infrastructure are reshaping global connectivity, Nokia (NOK) has emerged as a compelling yet underappreciated player. While the company's name may evoke memories of its early 2000s smartphone struggles, its current trajectory tells a different story: a strategic reinvention as a leader in AI-driven networking and 5G infrastructure, with long-term tailwinds that could redefine its valuation.

Strategic Realignment: From Legacy to AI-Centric Growth

Nokia's transformation began with a sharp pivot toward AI infrastructure and datacenter networking. According to a report by , the company's Network Infrastructure unit overtook its Mobile Networks division in revenue contribution in 2025, driven by surging demand for AI-driven IP and optical solutions. This shift aligns with the broader AI supercycle, where hyperscalers and enterprises are investing heavily in high-speed, low-latency networks to power generative AI and edge computing.

. As stated by , this move enhanced its optical networking capabilities, enabling it to meet the insatiable demand for datacenter interconnects and cloud infrastructure. The integration of Infinera's technology has in 2025, a stark contrast to its historically volatile performance.

5G Expansion: Capturing a $675 Billion Market

Nokia's dominance in 5G infrastructure is another cornerstone of its growth narrative. The global 5G infrastructure market, through 2034, . Nokia has positioned itself at the forefront of this expansion, particularly in the Middle East and Africa (MEA), where by 2030.

. Private 5G networks, which enable industries like manufacturing and logistics to optimize operations, are becoming critical infrastructure for AI-driven automation. Nokia's partnerships with hyperscalers and its focus on Fixed Wireless Access (FWA)- to 35% by 2030-further underscore its strategic agility.

Strategic Partnerships and Leadership Transition

Nokia's collaboration with Nvidia has been a game-changer. In a landmark deal, , signaling confidence in the company's role in powering AI's infrastructure needs. This partnership not only provides financial backing but also aligns Nokia with one of the most influential players in the AI ecosystem.

Under new CEO , who took the helm in late 2025, Nokia is undergoing a restructuring to streamline operations and focus on AI-era demands. Hotard's leadership has already yielded results: the company reported a third-quarter operating profit , exceeding analyst expectations, .

Valuation Debate: Overpriced or Undervalued?

Critics argue that Nokia's stock is overvalued, citing a price-to-earnings ratio . However, these metrics fail to account for the company's long-term positioning. The AI and 5G sectors are characterized by high upfront costs and delayed returns, yet reflects growing investor recognition of its strategic direction.

Moreover, Nokia's restructuring under Hotard has reduced operational complexity, improving efficiency and profitability. As the AI supercycle accelerates, the company's role in enabling cloud infrastructure and edge computing could justify a premium valuation.

Conclusion: A Compelling Infrastructure Play

Nokia's reinvention as an AI-driven networking leader and its aggressive expansion in 5G infrastructure position it as a hidden gem in the tech sector. While valuation skepticism persists, the company's strategic acquisitions, partnerships, and operational discipline suggest it is well-positioned to capitalize on multi-decade tailwinds. For investors seeking undervalued infrastructure plays with long-term growth potential, Nokia offers a compelling case-one where today's skepticism may soon give way to appreciation.