Morgan Stanley Raises Nokia Price Target on Strong AI Infrastructure Demand
Morgan Stanley has increased its price target for Nokia to €8.50, up from €6.50, while maintaining an Overweight rating. The brokerage said rising demand for artificial intelligence infrastructure is strengthening the company’s long-term growth prospects.
According to Morgan Stanley, the updated target reflects what had previously been considered its bull-case scenario, as global investment in cloud computing and AI data center networks continues to accelerate.
AI and Cloud Demand Support Growth Outlook
The brokerage also pointed to recent results from optical networking company Ciena, which reinforced expectations that demand for data center connectivity is expanding rapidly.
Ciena reported strong growth in cloud-related revenue, which Morgan Stanley believes supports the view that Nokia’s outlook for its Optical and IP networking division may be conservative.
Nokia has forecast revenue growth of 10% to 12% for this segment. However, Morgan Stanley expects stronger performance, predicting around 13% growth in 2026.
Hyperscale Data Centers Drive Optical Networking Growth
Morgan Stanley estimates that optical networking revenue could increase by more than 20%, largely driven by increasing demand from hyperscale data center operators.
Although AI and cloud-related business currently represents about 6% of Nokia’s total revenue, the brokerage said this segment is expanding quickly. The shift is helping Nokia reduce its dependence on slower spending cycles from traditional telecommunications operators.
Upcoming Industry Events Could Provide Catalysts
Morgan Stanley noted that investors should monitor several potential catalysts in the near term. One key event is the Optical Fiber Communication Conference, scheduled to take place from March 15 to March 19.
The conference could provide further insights into Nokia’s optical networking strategy and potential new partnerships with major hyperscale cloud companies.
Partnerships With Microsoft and NVIDIA
Nokia already supplies networking equipment for Microsoft’s Azure data centers and is collaborating with NVIDIA on AI networking technologies, strengthening its position in the rapidly expanding data center infrastructure market.
Higher Valuation Reflects Data Center Exposure
Morgan Stanley also raised its valuation assumptions for Nokia. The brokerage now applies a 14× target multiple on expected operating profit, compared with 10× previously.
The higher valuation reflects Nokia’s growing exposure to fast-growing data center connectivity markets, particularly those driven by AI and cloud infrastructure investments.
