Nokia's AI Leap: Partnership with Nvidia Fuels 40%+ Stock Surge in 2025 - Is It a Buy?

NokiaOnlines - Nokia, a name once synonymous with mobile phones, is making a remarkable comeback, not in handsets, but as a key player in the artificial intelligence (AI) era. The company's stock has surged over 40% in 2025, driven by a strategic partnership with tech giant Nvidia. This collaboration aims to build a 6G wireless system supporting AI radio access network (AI-RAN) technology, transforming networks from passive data pipes into intelligent traffic managers.

Embracing the AI Revolution

A New CEO, A New Direction

Nokia's transformation accelerated in the first quarter of 2025 with the appointment of a new CEO, Justin Hotard. This leadership change signals a stronger emphasis on AI, a move that seems to be paying off. The company's Q3 2025 revenue showed a significant 12% year-over-year increase, signaling a reversal from a challenging 2024 where revenue dropped by 9%.

Nvidia Partnership: A Game Changer

The partnership with Nvidia, announced in October 2025, is a cornerstone of Nokia's AI strategy. Nvidia's investment of $1 billion in Nokia stock underscores the significance of this collaboration. Together, they are developing advanced 6G wireless systems, poised to enhance AI capabilities at the network edge. This move positions Nokia to benefit from the explosive growth of the AI market, projected to reach $4.8 trillion by 2033.

Financial Performance and Outlook

Rebounding Revenues and Profitability

Despite a difficult 2024, Nokia has shown promising signs of recovery in 2025. Q3 2025 saw net sales increase by 12% year-over-year, with contributions from its optical networks business driven by AI and cloud growth. While operating profit saw a decline in Q3 2025 due to increased costs, the company is actively working on expense reduction initiatives, aiming for total savings of 1.2 billion euros by the end of 2026. Nokia reported a strong finish to 2024 with 9% net sales growth in Q4 and ended the year with a net cash position of EUR 4.9 billion.

Analyst Sentiment and Future Projections

Analysts are showing renewed interest in Nokia, with some raising price targets. Raymond James increased its price target to $7 from $6.50, citing Nokia's AI potential and mid-single-digit sales growth projections for 2026-2027. While Nokia may not command the same valuation multiples as specialized AI players, it holds a significant position in the AI market. The company has also set ambitious long-term financial targets, aiming for €2.7–€3.2 billion in annual comparable operating profit by 2028.

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