Nokia (NOK) Stock Surges as Morgan Stanley Names It Top Pick

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TLDR

  • Morgan Stanley increased its Nokia price target to €8.50 from €6.50—marking the highest target on the street—while maintaining an Overweight rating
  • The upgrade is fueled by growing spending on AI and cloud infrastructure, especially in optical and IP networking
  • Nokia’s AI and cloud-related revenue accounts for just ~6% of its total revenue but is expanding rapidly; Morgan Stanley projects ~13% growth in this segment by 2026
  • Prior downgrades from analysts at DNB Carnegie and Danske Bank, along with a lowered 2026 profit outlook, had previously pressured the stock
  • Nokia’s American Depositary Receipt (NOK) traded near $7.90 on Tuesday, while its Helsinki-listed shares have risen ~24% so far this year

Nokia, the Finnish telecommunications equipment manufacturer, received a significant boost this week after Morgan Stanley named it a top pick and established a new street-high price target.

Nokia Oyj, NOK
NOK Stock Card

The bank increased its target to €8.50 from €6.50 while retaining an Overweight rating on the stock. According to Bloomberg data, this makes it the highest target among all analysts covering Nokia.

The adjustment comes after optical networking competitor Ciena reported strong results, including robust cloud-related revenue growth. Morgan Stanley stated that these figures support the belief that Nokia’s guidance for its Optical and IP division may be too conservative.

Nokia had guided for 10% to 12% revenue growth in that segment. Morgan Stanley is projecting approximately 13% growth, with optical networking revenue alone anticipated to rise more than 20%—driven by hyperscale data center operators.

The stock has experienced volatility in recent weeks. Helsinki-listed Nokia rose more than 12% the previous week and surged over 37% in the past month—creating conditions for profit-taking. Midweek, the stock fell roughly 5% after dropping below its 5-day moving average.

Nokia’s ADR on the New York Stock Exchange closed near $7.90 on Tuesday, rising 1.28% for the day. Its Helsinki-listed shares were at €6.83 on Wednesday, up approximately 24% year-to-date.

Competing Downgrades Add Some Noise

Not all analysts are optimistic. On March 10, DNB Carnegie downgraded Nokia from Buy to Hold with a $6.50 target. Danske Bank took a similar action in late February, also setting a $6.50 target.

These downgrades, along with Nokia’s decision to reduce its 2026 profit outlook during its Q4 earnings report, have kept some investors wary—despite Nokia slightly exceeding earnings expectations.

In Q4, Nokia reported adjusted operating profit of €435 million on net sales of €4.83 billion, with revenue increasing 12% year-over-year. However, profitability was down approximately 10% compared to the same period the previous year.

The mobile networks segment continues to be a weak area, as radio access network spending remains slow and mobile revenue fell roughly 2% year-over-year in the last quarter.

AI and Cloud Driving the Story

Nokia’s AI and cloud-related business still makes up a small portion of its total revenue—around 6%—but it is growing rapidly and helping to offset slower spending by telecom operators.

Morgan Stanley increased its valuation multiple for Nokia from 10× to 14× based on expected operating profit, citing the company’s expanding presence in data center connectivity markets.

Nokia already provides networking equipment to Microsoft Azure and collaborates with NVIDIA on AI networking solutions. NVIDIA owns a 2.9% stake in Nokia.

The bank highlighted the Optical Fiber Communication Conference—taking place from March 15 to 19—as a near-term event to monitor. It could provide updates on Nokia’s optical strategy and potential new hyperscale partnerships.

In December, Moody’s reaffirmed Nokia’s Ba1 credit rating and upgraded its outlook to positive, noting expected profitability improvements from 2026 to 2028. As of September 2025, Nokia had approximately €6.1 billion in cash and committed credit facilities.

The overall analyst sentiment remains cautiously positive. A MarketBeat consensus from early January indicated a “Moderate Buy” rating, with 8 buy, 3 hold, and 1 sell recommendations among 12 analysts. The average 12-month ADR target was approximately $6.10, though some models placed it nearer to $7.36—with Morgan Stanley’s $8.50 target now being the highest.