Rosenblatt Initiated Nokia Stock with "Buy" Rating - AI Infrastructure Boosting Optical Networks Business

Rosenblatt initiated coverage on Nokia shares with a "Buy" rating and set a price target of $15. The investment firm believes that Nokia's optical networks business is becoming one of the main beneficiaries of the large-scale development of AI infrastructure, while the company's shares are still trading at the valuation of a traditional telecommunications equipment manufacturer.

Rosenblatt analyst Mike Genovese stated that Nokia's Network Infrastructure division is emerging as "one of the best-positioned optical assets in AI development." In the second quarter of 2026, the company's Optical Networks revenue grew 20% year-over-year, while AI & Cloud revenue doubled. AI and Cloud orders reached €2.8 billion in the quarter, of which roughly half is expected to convert into revenue over the next 12 months.

According to Genovese, Nokia has gained significant positions in so-called "scale-across" networks — one of the most difficult types of infrastructure to replace, since once integrated into an architecture, switching to another technology becomes challenging.

To meet growing demand for AI infrastructure, Nokia is expanding its Indium Phosphide laser manufacturing capabilities in the US. The company is investing in facilities in San Jose and Pennsylvania, as well as developing a new campus in Chandler, Arizona, resulting from its acquisition of NXP. The goal is to ensure the supply of advanced optical components.

Optical Networks accounts for roughly 45% of Nokia's Network Infrastructure segment and about 20% of the company's total revenue. According to Genovese, Nokia's trailing 12-month Optical Networks sales stand at approximately $4 billion, similar to competitor Ciena's figures. Both companies hold leading positions in the data center interconnect (DCI) and "scale-across" networking markets.

Rosenblatt estimates that the global Optical DCI market, currently worth about $12 billion, could grow to $40-50 billion by 2030. This implies a compound annual growth rate (CAGR) of approximately 35%.

Nokia itself is also emphasizing its positioning in AI infrastructure. This week, at the Nokia AI Infra Summit and Wavelengths Americas 2026, the company is showcasing its optical networking solutions, including 800G optical technologies designed to provide high-bandwidth connectivity between data centers and wide area networks.