Optical Module Sourcing Surges, Why is NOK the Second Leader After MRVL?

TL;DR

· Nokia’s stock price has risen by nearly 170% since last October.
· AI-RAN is transitioning from validation to early commercial orders.
· Related tickers: NOK (NYSE), NVDA (NASDAQ).

Nokia’s stock price is currently around $16.8, up nearly 170% since Nvidia’s $6.01 stock purchase in October 2025, adding about $60 billion in market value, reaching a 16-year high. The market no longer sees it merely as a cyclical telecom equipment provider but quickly revalues it as an AI network and edge infrastructure player. Nvidia’s equity investment and tech collaboration have been the most direct catalyst.

Behind this is the significant trend of AI capex moving from core data centers to telecom edge, RAN, and optical networks. The question is, how far has this reassessment gone, and how much support can it truly provide for the stock price going forward?

Nokia’s Stock Price Has Completed the AI Infrastructure Revaluation

Since October 2025, when Nvidia announced a $10 billion equity investment and secured an AI-RAN strategic partnership, Nokia’s stock price has surged by nearly 170%. The increase since the beginning of 2026 has exceeded 140%, rising from around $6.5 to a May high of $15.78. In early June, it fluctuated in the $16.25-16.85 range, hitting a 16-year high after the Q1 earnings report.

The current market cap is around $85-94 billion, an increase of about $60 billion from before the investment. The AI&Cloud business accounts for about 8% of total sales but contributes significantly to growth. The trailing P/E ratio is close to 100x over the past 12 months, with a forward P/E ratio of around 42x, significantly higher than traditional telco peers but still lower than pure-play AI infrastructure companies. In comparison, Ericsson’s stock performance lags due to its choice of a more independent ASIC chip route.

These changes indicate that the market has been trading Nokia’s transformation from a ‘forgotten telco stock’ to an AI infrastructure participant. With Nvidia holding around 3% of the shares, providing both tech endorsement and some alignment of interests, coupled with the U.S. drive to regain leadership in the telecom space, this reassessment has been accelerated.

However, after a significant outperformance in the stock price, what the market truly trades now is which of these business developments can materialize?

Q1 Order and Guidance Upside Validate Transformation Acceleration

In the Q1 2026 earnings report, Nokia’s AI&Cloud net sales saw a YoY growth of 49%, securing €1 billion in new orders and experiencing a significant 54% increase in comparable operating profit. As a result, the company raised its AI&Cloud addressable market CAGR expectation for 2025-2028 from 16% to 27% and also raised the full-year growth guidance for Network Infrastructure from 6-8% to 12-14%.

During the same period, the Optical Networks business grew by 20%, becoming a critical part of connecting hyperscaler AI data centers. Following the acquisition of Infinera, this capability has been further strengthened. Strong new order intake drove a free cash flow of €629 million, with a robust net cash position providing a buffer for future execution.

These numbers indicate that Nvidia’s partnership is transitioning from an equity story to visible revenue acceleration. While AI&Cloud’s share is still low, its incremental contribution is significant. The company’s upward revision of its full-year guidance reflects management’s strong confidence in sustained demand. Institutional net buy-in over the past 12 months has been positive, with bullish option activity above normal levels, further supporting this assessment.

MWC Testing and Innovation Lab Validate Early Commercial Path

During MWC 2026, Nokia completed GPU-accelerated feature testing and over-the-air upgrades with operators such as T-Mobile, SoftBank, and Indosat. At T-Mobile’s AI-RAN Innovation Center, they integrated Nokia’s AirScale Massive MIMO wireless equipment with Nvidia’s Grace Hopper servers, successfully enabling AI workloads to run concurrently with RAN tasks, supporting real-life use cases like video streaming, generative AI queries, and more.

In May 2026, Nokia established an AI Networking Innovation Lab in Sunnyvale, California, collaborating with partners like AMD, Lenovo, Supermicro, and Keysight to develop the next generation of AI data center networks. They also introduced AI capabilities for fixed broadband products to help operators automatically diagnose issues, reduce costs, and accelerate fiber deployment.

These developments indicate that Nokia’s anyRAN software’s acceleration path on Nvidia’s GPU platform is ready for implementation. AI-RAN (AI-optimized Radio Access Network) is no longer a conceptual idea but can achieve real-time optimization, lower power consumption, and generate new edge services within actual operator networks, providing a viable path from 5G-Advanced to 6G transition. Nokia CEO Justin Hotard stated that the collaboration is shifting from validation to early commercial deployment.

In simple terms, Nokia is putting Nvidia GPUs into traditional wireless network hardware to enable AI computing and network transport tasks to run in parallel. This allows real-time network optimization, energy savings, and the development of new services. This approach turns general-purpose devices into smarter edge infrastructure.

Deployment Scale under High Valuation as the Key Constraint

Despite positive Q1 data, test results, and ecosystem partner expansion, the current P/E ratio is close to 100x, with analysts’ consensus target price around 9.4-12 euros (some investment banks have raised it to around 12-14 euros), significantly lagging behind the current stock price. This indicates that the market has already priced in a more optimistic view of long-term AI-RAN penetration and 27% growth expectations, leaving very limited margin of safety.

Over the next 12-24 months, the conversion speed of actual large-scale operator deployments, the overall pace of AI capital expenditure, and the divergence from Ericsson’s path (the latter insists on independent ASICs to avoid deep ties to a single GPU supplier) will be core variables. If subsequent orders fall short of expectations or AI spending slows down, the downside risks will be significantly amplified.

Currently, institutional net buying and a preference for call options are still supporting stock price momentum, but these ultimately need to be validated by execution. Nokia’s position as a representative of AI edge infrastructure has been recognized, and the integration of optical networking with wireless access also expands the overall market space. However, there is still a significant gap from the current early orders to true commercialization at the hyperscale cloud provider level.

We are still in the early stages of acceleration, with overall execution signals being positive. But the high valuation has squeezed the margin of safety significantly, and investors will now need to focus on real large-scale deployment progress rather than new demonstrations to assess how far this trend of AI extending to telecom edge can go.

[BlockBeats]