Is Nokia a Must-Own Stock for 2026?

Core Viewpoint - Nokia's partnership with Nvidia significantly enhances its artificial intelligence (AI) strategy, positioning the company as a key player in the AI era, with stock surging over 40% in 2025 [2][4]. Company Overview - Nokia has transitioned from a mobile phone leader to focusing on networking infrastructure and wireless network solutions [1]. - The company experienced a 9% revenue decline in 2024, totaling 19.2 billion euros, but is seeing transformative changes in 2025 [4][11]. Partnership with Nvidia - Nokia announced a partnership with Nvidia to develop a wireless network that supports AI applications at the edge, marking a strategic shift towards AI emphasis [5][6]. - The collaboration aims to create a 6G wireless system utilizing AI radio access network (AI-RAN) technology, which enhances network management for improved performance [6][8]. - Nvidia will invest $1 billion in Nokia by purchasing shares at $6.01 each, further solidifying the partnership [7]. Financial Performance - In Q3 2025, Nokia reported a revenue increase of 12% year-over-year, reaching 4.8 billion euros, aided by the acquisition of Infinera [11]. - Despite revenue growth, Q3 operating profit fell 14% to 239 million euros, and diluted earnings per share (EPS) dropped 67% to 0.01 euros due to rising costs [12]. - The company is targeting cost savings of 1.2 billion euros by the end of 2026, having already achieved 0.8 billion euros in savings [12]. Market Outlook - The AI market is projected to grow to $4.8 trillion by 2033, representing a 25-fold increase from 2023's $189 billion, which bodes well for Nokia's AI initiatives [13]. - The demand for AI-driven wireless solutions is expected to rise, driven by advancements in self-driving cars, drones, and robotics [10]. Competitive Landscape - Nokia's focus on AI-RAN technology is seen as a strong strategy, but it faces competition from companies like Ericsson and Cisco Systems [14]. - The company's forward price-to-earnings (P/E) ratio is comparable to Cisco's, but it must demonstrate long-term financial success to be considered a strong buy [15][17].