Nokia and Nscale: A Game-Changing AI Infrastructure Alliance

The AI infrastructure market is entering a transformative phase, driven by insatiable demand for computational power to train large language models, optimize enterprise workflows, and fuel next-generation applications. In this rapidly evolving landscape, partnerships between established technology firms and agile infrastructure providers are becoming critical to capturing long-term value. Nokia's recent alliance with Nscale, a UK-based AI-native infrastructure platform, exemplifies this trend. By combining Nokia's networking expertise with Nscale's aggressive global deployment strategy, the two companies are positioning themselves at the forefront of a market projected to grow from $32.98 billion in 2025 to $146.37 billion by 2035 : AI Infrastructure Market Size & Growth [2035]^[1].

Strategic Synergy: Nokia's Networking Prowess Meets Nscale's AI Ambitions

Nscale's vision to build scalable, secure, and sustainable AI infrastructure aligns seamlessly with Nokia's strengths in high-performance networking. As part of their September 2025 partnership, Nokia has been designated as Nscale's preferred networking provider for global AI-ready data centers. This includes deploying Nokia's data center switching, IP routing, and optical networking solutions to support AI clusters requiring ultra-low latency and massive bandwidth : Nokia and Nscale partner to accelerate AI infrastructure build-out^[2]. The collaboration extends beyond hardware: the two firms plan to co-develop innovations in the networking stack tailored for AI workloads, a critical differentiator in an industry where even marginal improvements in efficiency can translate to significant cost savings for hyperscalers : Nokia Shifts Focus to AI and Network Infrastructure^[3].

Nscale's rapid ascent underscores the urgency of this partnership. The company has already secured a $500 million equity investment from NVIDIA and a $155 million Series A round led by Sandton Capital Partners : AI startup Nscale from UK is blowing away Nvidia CEO Jensen Huang^[4]. Its most ambitious project—a 50MW AI supercomputer in the UK, powered by 23,040 NVIDIA Blackwell GPUs—highlights its focus on large-scale deployments. Meanwhile, Nscale's $6.2 billion agreement with Microsoft and Aker to build hyperscale AI infrastructure in Norway, powered by renewable energy, positions it as a leader in sustainable AI : Aker-Nscale JV signs Multi-Billion Dollar AI infrastructure agreement with Microsoft^[5]. For Nokia, aligning with Nscale provides access to these high-growth projects while reinforcing its role as a key supplier to hyperscalers, a segment that now accounts for a significant portion of its Network Infrastructure division's revenue : Nokia’s Strategic Priorities for 2025: Innovation and Growth^[6].

Market Dynamics: Growth, Competition, and Challenges

The AI infrastructure market is expanding at an unprecedented pace, with forecasts ranging from a 17.71% CAGR to a staggering 31.9% CAGR between 2025 and 2030 : AI Infrastructure Market Size & Growth [2035]^[1]. This growth is fueled by the proliferation of AI-optimized hardware, such as GPUs and TPUs, and the shift toward hybrid and multi-cloud architectures. However, the market is not without its challenges. A chronic shortage of AI-class GPUs, high capital expenditures, and the complexity of integrating AI systems with legacy infrastructure remain significant hurdles : AI Infrastructure Market Size & Share Analysis - Growth Trends^[7].

Nokia and Nscale's partnership addresses these pain points directly. By leveraging Nokia's 800G optical networking capabilities—bolstered by its 2025 acquisition of Infinera—the alliance ensures that data centers can scale their AI clusters without bottlenecks in connectivity : Nokia reshapes for AI ‘supercycle’^[8]. This is particularly critical for Nscale's global ambitions, which include deploying 300,000 NVIDIA GPUs across multiple regions. For investors, the partnership's focus on interoperability and sustainability—key concerns for hyperscalers and regulators alike—positions it to outperform competitors reliant on fragmented or energy-inefficient solutions.

Nokia's Broader AI-First Strategy

Nokia's collaboration with Nscale is part of a broader strategic pivot under CEO Justin Hotard. The company has restructured its operations to prioritize AI and network infrastructure, with the Network Infrastructure division surpassing Mobile Networks in Q2 2025 revenue : Nokia CEO Announces Strategic Pivot Toward AI^[9]. This shift is underpinned by a $6.4 billion investment in AI-focused R&D and the integration of AI-driven automation across its product lines. Notably, Nokia's AI-RAN (Radio Access Network) Center in Dallas and its defense partnership with Lockheed Martin and Verizon demonstrate its ability to apply AI to both commercial and mission-critical use cases : Nokia's Strategic Priorities for 2025: Innovation and Growth^[10].

The financial implications of this strategy are promising. In Q2 2025, enterprise sales accounted for 16% of Nokia's revenue, driven by private 5G deployments and edge computing projects : Nokia reshapes for AI ‘supercycle’ – as…^[11]. With AI infrastructure expected to become a dominant revenue stream, Nokia's diversified approach—balancing traditional mobile networks with cutting-edge AI solutions—reduces exposure to sector-specific risks while capitalizing on cross-industry demand.

Nscale's Role in the AI Ecosystem

Nscale's rapid rise is a testament to the market's appetite for specialized AI infrastructure. Its partnerships with Microsoft, OpenAI, and NVIDIA—alongside its Stargate UK initiative—position it as a critical enabler of AI innovation in Europe and beyond. The company's focus on renewable energy-powered data centers also aligns with global sustainability goals, a factor increasingly influencing investment decisions. For Nokia, co-developing AI-optimized networking solutions with Nscale offers a dual advantage: it secures a long-term revenue stream from infrastructure-as-a-service (IaaS) contracts and strengthens its relationships with hyperscalers, who are now the primary drivers of AI infrastructure demand : AI Infrastructure Market Size, Share, And Trends Analysis | 2025 …^[12].

Conclusion: A Win-Win for Long-Term Investors

The Nokia-Nscale alliance represents a strategic masterstroke in the AI infrastructure race. For Nokia, it accelerates its transition from a legacy telecom vendor to a leader in AI-driven connectivity. For Nscale, it provides the technical and financial backing needed to scale its ambitious global projects. Together, they address the market's most pressing challenges—scalability, security, and sustainability—while capitalizing on the explosive growth of AI. As the market matures, investors who recognize the value of this partnership will be well-positioned to benefit from the AI “supercycle” unfolding over the next decade.