Nokia's Strategic Reorientation Toward AI-Driven Connectivity: A Pathway to Long-Term Value Creation

In an era where artificial intelligence (AI) is reshaping global industries, Nokia's strategic pivot toward AI-driven connectivity positions the Finnish telecommunications giant at the intersection of two transformative megatrends: the AI supercycle and the next-generation infrastructure revolution. As the company unveils a restructured operating model and ambitious financial targets, investors are left to assess whether Nokia's bets on AI-native networks and 6G will translate into sustainable value creation.

Strategic Reorientation: Aligning with the AI Supercycle

Nokia's 2025 Capital Markets Day marked a pivotal shift in its corporate strategy, with the company explicitly framing its future around the AI supercycle. According to a report by , Nokia outlined five strategic priorities: accelerating growth in AI and cloud services, leading the transition to AI-native networks and 6G, co-innovating with customers and partners, focusing capital on differentiating areas, and unlocking sustainable returns. This reorientation reflects a recognition that AI's exponential growth will demand infrastructure capable of handling unprecedented data volumes and computational demands.

Central to this strategy is Nokia's decision to reorganize its business into two operating segments-Network Infrastructure and Mobile Infrastructure-effective January 1, 2026. According to the same report, the Network Infrastructure segment will prioritize AI and data center expansion, while the Mobile Infrastructure segment will focus on AI-native networks and 6G development. This bifurcation not only streamlines operations but also aligns Nokia's resources with high-growth verticals. For instance, the company's new Nokia Defense unit, dedicated to leveraging core network technologies for defense applications, underscores its intent to diversify into niche, high-margin markets.

Business Streamlining: Operational Efficiency as a Catalyst

Nokia's restructuring is not merely a strategic realignment but a calculated move to enhance operational efficiency. By consolidating its operations into two segments, the company aims to reduce redundancies and accelerate innovation. As stated in a Marketscreener report, Nokia has set a target to cut Group Common and Other operating expenses from €350 million to €150 million by 2028. This cost discipline is critical for maintaining profitability in a capital-intensive industry where margins are often squeezed by R&D and infrastructure costs.

Moreover, the reorganization is designed to improve financial transparency and accountability. The Network Infrastructure segment, for example, is tasked with achieving 6–8% annual revenue growth and a 13–17% operating margin by 2028. According to the same report, these metrics signal a shift from Nokia's historically conservative approach to a more aggressive pursuit of market share in AI-driven infrastructure. The Mobile Infrastructure segment, meanwhile, aims for a 48–50% gross margin, reflecting confidence in its ability to monetize 6G and AI-native solutions. According to Marketscreener, this reflects confidence in its ability to monetize 6G and AI-native solutions.

Infrastructure Investments: Positioning for the Future

Nokia's long-term value creation hinges on its ability to lead in AI-native networks and 6G-a domain where early movers could dominate for decades. The company's focus on AI-native networks is particularly noteworthy. Unlike traditional networks optimized for static workloads, AI-native architectures are designed to dynamically allocate resources based on real-time AI-driven insights. This capability is essential for applications ranging from autonomous vehicles to smart cities, where latency and scalability are critical.

Investing in 6G is equally ambitious. While 5G networks are still being deployed globally, Nokia is already positioning itself to capture the next wave of demand. A report by GlobeNewswire highlights that the company's Mobile Infrastructure segment will combine core and radio networks to accelerate 6G development. This vertical integration reduces dependency on third-party suppliers and allows Nokia to control the entire value chain, a strategic advantage in an industry where proprietary technology often dictates market leadership.

Financial Strategy: Balancing Ambition with Prudence

Nokia's financial targets for 2028-€2.7 billion to €3.2 billion in comparable operating profit-are ambitious but achievable given its cost-cutting initiatives and revenue growth projections. According to Advanced Television, the company's focus on free cash flow conversion (targeting 65–75% of operating profit) further underscores its commitment to shareholder returns. For investors, this balance between reinvestment and profitability is crucial. Nokia must allocate sufficient capital to R&D and infrastructure while maintaining the financial flexibility to navigate macroeconomic headwinds.

One potential risk lies in the pace of AI adoption. If the AI supercycle slows or if competitors like Ericsson or Huawei gain traction in 6G, Nokia's margins could face pressure. However, the company's dual-segment structure and cost discipline provide a buffer against such volatility. Additionally, its emphasis on co-innovation with partners-such as cloud providers and hyperscalers-mitigates the risk of technological obsolescence by ensuring its solutions remain aligned with market needs.

Conclusion: A Calculated Bet on the Future

Nokia's strategic reorientation toward AI-driven connectivity is a bold but well-calculated move. By streamlining operations, investing in high-growth infrastructure, and setting clear financial targets, the company is positioning itself to capitalize on the AI supercycle and the 6G transition. While execution risks remain, the alignment of strategic priorities with macroeconomic trends suggests that Nokia's long-term value creation potential is substantial. For investors, the key will be monitoring progress against its 2028 targets and assessing whether the company can maintain its innovation edge in an increasingly competitive landscape.