When most investors think of Nokia(NYSE: NOK), they probably remember the brick phones that pioneered mobile devices decades ago. What you may not appreciate is that the Finnish company is quietly undergoing a renaissance, and artificial intelligence (AI) is at the center of its transformation.
Nokia has built telecommunications infrastructure spanning networks that connect mobile devices and transport data. Given the AI infrastructure boom, the company is smartly leveraging these assets to become a supplier of AI networking equipment.
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One of the biggest believers in this strategy is Nvidia(NASDAQ: NVDA). While Nvidia has made a number of strategic investments in chip and foundry specialists like Intel or neocloud providers like CoreWeave, I think its most lucrative partnership might be with Nokia.
The semiconductor giant invested $1 billion in Nokia last year, establishing a framework that stands to reshape the telecommunications industry. Following Nokia’s third-quarter earnings report, investors have fresh evidence that its AI-driven transformation is gaining momentum.
How Nokia is evolving from phones to AI
Last October, Nvidia invested $1 billion in Nokia, acquiring 2.9% of the company. The two companies are collaborating on artificial intelligence radio access networks (AI-RAN), which combine traditional wireless networking equipment with accelerated computing. Essentially, Nvidia and Nokia are turning telecommunications networks into distributed AI platforms.
This is important because much of the current AI revolution revolves around data centers. However, emerging applications involving autonomous vehicles, robotics, industrial automation, and connected devices will require AI processing closer to where information is actually generated. This process is known as edge AI, and according to data compiled by Omdia, the AI-RAN market is expected to exceed $200 billion by 2030.
Nokia’s earnings reveal where the real growth is happening
During the third quarter, Nokia generated 5.2 billion euros in revenue. On the surface, this may look mundane, as it represented only 9% growth year over year on a constant-currency basis. Operating profit increased 35% to 605 million euros, while earnings per share (EPS) climbed 50% to 0.09 euros.
