Nokia AI infrastructure telecom equipment

Nokia Bets Big on AI — Sets Ambitious Profit Target to Seize Cloud & Telecom­-Infra Growth

Posted on November 19, 2025 at 10:16 PM

Nokia Bets Big on AI — Sets Ambitious Profit Target to Seize Cloud & Telecom­-Infra Growth

In a move signalling a pivotal shift, Finnish telecom equipment giant Nokia has unveiled a fresh long-term strategy anchored in artificial intelligence and cloud infrastructure — setting a target for its annual comparable operating profit to reach €2.7–3.2 billion by 2028, up from around €2 billion last year. ([Reuters][1])

At the heart of Nokia’s roadmap is a business reorganisation launching in 2026, which will divide its operations into two distinct arms: one focused on network infrastructure tailored to AI and data-centre clients, and the other concentrating on its core telecoms business of mobile infrastructure. ([Reuters][1])

The Strategy: Why It Matters

  • Nokia is betting that the traditional telecoms market—especially 5G deployment—is slowing. ([Reuters][1])
  • To address this, the company is doubling down on AI-driven networking and serving the major cloud providers (“hyperscalers”), where demand is ramping up. As CEO Justin Hotard said: “The largest hyperscalers are now investing more each quarter than the largest telcos invest in a year.” ([Reuters][1])
  • This strategy is bolstered by Nokia’s acquisition of US optical-networking firm Infinera and a strategic investment of US $1 billion by chip-maker NVIDIA Corporation (which bought a ~2.9 % stake in Nokia). ([Reuters][1])
  • In parallel, Nokia plans to slash group operating expenses from €350 million today to €150 million by 2028. ([Reuters][1])
  • Despite the bold plan, the market’s reaction was muted: Nokia shares fell as much as 6% on the day, even though the stock remains up around 25% year-to-date. Analysts suggest the bar may have been set even higher by elevated investor expectations. ([Reuters][1])

Implications for Stakeholders

  • Investors: The target sets up a potential ~35–60 % profit uplift over roughly three years, provided execution holds. But the drop in share price suggests investor caution — likely due to the sizeable investments needed and uncertain returns in the AI/infra space.
  • Industry: Nokia’s pivot reflects a broader trend: telecom equipment suppliers are expanding into cloud-infra, AI workloads and data-centre networking to counter slower telecom capex.
  • Customers & Partners: For large cloud providers and telcos alike, Nokia’s re-focus means a vendor looking to bridge telecom and hyperscale networking technologies. For Nokia’s traditional telco customers, the strategy may signal less incremental focus on legacy 5G alone.
  • Risk Factors: Execution risk looms large: successfully splitting the business, securing hyperscaler contracts, and delivering strong AI-infra revenue growth are all non-trivial. Also, AI infrastructure is a crowded, fast-moving field with margin pressure.

The Bottom Line

Nokia is making a clear pivot: from being primarily a telecom network equipment vendor to becoming a key player in AI-driven, data-centre-and-cloud networking. The profit target of €2.7–3.2 billion by 2028 is ambitious, and signals the scale of its intent. But the real test will come in the coming years as the company executes on restructuring, captures new business with hyperscalers and shows that AI-infra can be a high-margin growth engine.

Glossary

  • Comparable operating profit: A metric that shows profit from core operations, excluding one-off items, giving a clearer view of underlying performance.
  • Hyperscaler: A large cloud provider (e.g., AWS, Microsoft Azure, Google Cloud) that operates very large-scale data centres and infrastructure.
  • Telecom capex: Capital expenditure by telecommunications companies, such as for deploying 5G networks. A slowdown here impacts traditional network-equipment vendors.
  • Data-centre networking/AI infrastructure: Hardware and software infrastructure specifically designed for large-scale data-centre operations and AI/model training or inference workloads.

Source: Reuters – “Nokia bets on AI with new strategy, targets up to 60% profit rise”

[1]: https://www.reuters.com/business/nokia-sets-new-long-term-annual-profit-target-2025-11-19/ “Nokia bets on AI with new strategy, targets up to 60% profit rise Reuters”
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