Morgan Stanley has boosted its valuation case for Nokia, elevating the bank's price target on the company’s Helsinki-listed shares to €14 from €11 and reiterating Nokia as its top pick. The bank also lifted its target on the U.S.-listed shares to $16.50 from $13, citing a strategic shift that positions Nokia to capture a larger share of data center spending linked to AI and cloud growth.
At the time of the note, the stock was trading at €12.56. The shares have already experienced substantial gains this year, rising by more than 100% year-to-date and roughly 150% over the past 12 months, according to the note.
Morgan Stanley frames Nokia’s re-rating around the company’s transformation from a traditional mobile technology vendor into a supplier focused on optical networking equipment tailored for data centers. The bank highlights that Nokia’s AI and cloud-related revenues were €1.1 billion in 2025, a level it describes as well below peers but an addressable opportunity given the nascent stage of the business.
The analysts, led by Terence Tsui, noted that the low starting point for AI and cloud revenue can amplify the impact of new orders: "Potential new orders can have an outsized effect on the absolute revenue figure and the rate of change can be significant, especially when starting off a low base," they wrote.
A key near-term driver identified by Morgan Stanley was the revenue guidance upgrade inside Nokia’s optical and IP networks unit, which the company raised to 18-20% growth from a prior 10-12% range. Morgan Stanley projects an even stronger outcome, forecasting 21% growth for the unit and modeling 2028 operating profit of €3.65 billion versus the top end of Nokia’s own guidance at €3.2 billion.
The bank also points to a scarcity factor that supports investor interest. "The AI story in Europe has largely evolved around compute, energy and electrical components with few companies involved directly in connectivity/networking," the analysts observed, adding that Nokia’s role as a Western supplier of critical connectivity infrastructure has garnered attention from the investor community.
Morgan Stanley identifies several potential catalysts going forward. These include results from optical-networking peer Ciena scheduled for June 4, possible announcements of partnerships with hyperscale cloud providers, and a potential inclusion of Nokia in the Euro Stoxx 50 index in September, an event the bank suggests could spur technical buying if it occurs.
Context and implications
The bank’s note ties Nokia’s valuation upside to demand dynamics in data center optical networking driven by AI and cloud capital expenditure, an area where Nokia’s current revenue base is relatively small but where Morgan Stanley sees scope for rapid expansion. The revised targets reflect both the upgraded near-term unit guidance and Morgan Stanley’s more bullish forward operating profit estimate.
What to watch next
- June 4 - Ciena results, cited as an optical-networking peer read-through.
- Announcements of any hyperscaler partnerships involving Nokia.
- September - potential Euro Stoxx 50 inclusion and related technical flows.