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Nokia Rides on Portfolio Diversification: Can it Boost Growth?
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Key Takeaways
Nokia's diversified portfolio is expanding toward AI infrastructure, data centers and autonomous networking.
Nokia's AI & Cloud sales more than doubled year over year in the second quarter, with 2.8 billion in orders.
Portfolio optimization and partnerships are helping Nokia target AI-enabled networking applications.
Nokia Corporation (NOK - Free Report) is benefiting from its diversified connectivity portfolio. The company continues to invest in its 5G and next-generation networking capabilities. NOK has strengthened its 5G portfolio through AirScale enhancements and ReefShark developments. It has more than 26,000 patents, including more than 8,000 patents considered essential to 5G technologies.
Over the last few quarters, its portfolio has also become better aligned with the AI infrastructure investment cycle. AI & Cloud sales more than doubled year over year in the second quarter, while AI & Cloud order intake reached €2.8 billion. Revenue diversification away from its legacy telecom business and toward hyperscale data centers, AI networks and autonomous networking will likely bring long-term benefits.
Nokia’s portfolio strength is not simply about having more businesses. The company moved Fixed Wireless Access CPE and Enterprise Campus Edge into discontinued operations in the second quarter. The company is set to sell its FWA CPE business to Inseego. This portfolio optimization strategy allows the company to deploy capital more efficiently and create operating leverage.
The combination of mobile networks, optical transport, IP networking, fixed broadband, software and licensing gives the company exposure to the conventional connectivity market and emerging AI networking space as well. Growing collaboration with Google Cloud, Vodafone Albania, Indosat Ooredoo Hutchison and a U.S. hyperscaler shows how Nokia is gaining ground in software-led and AI-enabled networking applications.
However, portfolio diversity does not eliminate Nokia’s risks. AI networking and cloud still remain relatively smaller parts of Nokia’s top line. Cyclical telecom spending and stiff competition continue to weigh on revenue and margin.
How Are Competitors Faring?
Nokia faces stiff competition from Ericsson (ERIC - Free Report) in the mobile infrastructure market. Ericsson is well positioned to cash in on the market momentum with its competitive 5G product suite. The company boasts a comprehensive portfolio of 60,000 granted patents. A highly skilled team makes this possible, while close collaboration with customers ensures quick uptake, driving sustainable growth. Around 50% of the world’s mobile 5G traffic runs on Ericsson’s radio networks. However, despite intense competition with Ericsson in conventional telecom infrastructure, Nokia appears well positioned in the emerging AI-networking market.
In the AI networking space, the company faces competition from industry leader Arista Networks, Inc. (ANET - Free Report) . Arista has broadened its networking portfolio to address evolving AI, cloud and enterprise infrastructure requirements. The company now offers switching platforms spanning traditional Ethernet deployments through emerging 1.6-terabit AI fabrics while expanding liquid-cooled networking solutions for next-generation data centers. Arista’s unified EOS architecture enables programmable networking across client, campus, cloud and AI environments while supporting advanced routing, observability and operational automation.
NOK’s Price Performance, Valuation & Estimates
Nokia shares have soared 146.9% over the past year compared with the industry’s 28.2% growth.
Image Source: Zacks Investment Research
From a valuation standpoint, Nokia trades at a forward price-to-sales ratio of 2.42, below the industry tally of 4.98.
Image Source: Zacks Investment Research
Earnings estimates for 2026 have declined 2.5% to 39 cents over the past 60 days, while those for 2027 have also increased 2.04% to 50 cents.
View the Zacks #1 Rank List
Image: Shutterstock
Nokia Rides on Portfolio Diversification: Can it Boost Growth?
Key Takeaways
Nokia Corporation (NOK - Free Report) is benefiting from its diversified connectivity portfolio. The company continues to invest in its 5G and next-generation networking capabilities. NOK has strengthened its 5G portfolio through AirScale enhancements and ReefShark developments. It has more than 26,000 patents, including more than 8,000 patents considered essential to 5G technologies.
Over the last few quarters, its portfolio has also become better aligned with the AI infrastructure investment cycle. AI & Cloud sales more than doubled year over year in the second quarter, while AI & Cloud order intake reached €2.8 billion. Revenue diversification away from its legacy telecom business and toward hyperscale data centers, AI networks and autonomous networking will likely bring long-term benefits.
Nokia’s portfolio strength is not simply about having more businesses. The company moved Fixed Wireless Access CPE and Enterprise Campus Edge into discontinued operations in the second quarter. The company is set to sell its FWA CPE business to Inseego. This portfolio optimization strategy allows the company to deploy capital more efficiently and create operating leverage.
The combination of mobile networks, optical transport, IP networking, fixed broadband, software and licensing gives the company exposure to the conventional connectivity market and emerging AI networking space as well. Growing collaboration with Google Cloud, Vodafone Albania, Indosat Ooredoo Hutchison and a U.S. hyperscaler shows how Nokia is gaining ground in software-led and AI-enabled networking applications.
However, portfolio diversity does not eliminate Nokia’s risks. AI networking and cloud still remain relatively smaller parts of Nokia’s top line. Cyclical telecom spending and stiff competition continue to weigh on revenue and margin.
How Are Competitors Faring?
Nokia faces stiff competition from Ericsson (ERIC - Free Report) in the mobile infrastructure market. Ericsson is well positioned to cash in on the market momentum with its competitive 5G product suite. The company boasts a comprehensive portfolio of 60,000 granted patents. A highly skilled team makes this possible, while close collaboration with customers ensures quick uptake, driving sustainable growth. Around 50% of the world’s mobile 5G traffic runs on Ericsson’s radio networks. However, despite intense competition with Ericsson in conventional telecom infrastructure, Nokia appears well positioned in the emerging AI-networking market.
In the AI networking space, the company faces competition from industry leader Arista Networks, Inc. (ANET - Free Report) . Arista has broadened its networking portfolio to address evolving AI, cloud and enterprise infrastructure requirements. The company now offers switching platforms spanning traditional Ethernet deployments through emerging 1.6-terabit AI fabrics while expanding liquid-cooled networking solutions for next-generation data centers. Arista’s unified EOS architecture enables programmable networking across client, campus, cloud and AI environments while supporting advanced routing, observability and operational automation.
NOK’s Price Performance, Valuation & Estimates
Nokia shares have soared 146.9% over the past year compared with the industry’s 28.2% growth.
Image Source: Zacks Investment Research
From a valuation standpoint, Nokia trades at a forward price-to-sales ratio of 2.42, below the industry tally of 4.98.
Image Source: Zacks Investment Research
Earnings estimates for 2026 have declined 2.5% to 39 cents over the past 60 days, while those for 2027 have also increased 2.04% to 50 cents.
Image Source: Zacks Investment Research
Nokia currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.