Nokia’s Strategic Shift and Infinera Merger Drive Buy Rating Upgrade
Janardan Menon has upgraded Nokia's rating to Buy, citing its strategic shift towards AI data centers and growth prospects. The merger with Infinera enhances Nokia's competitive position and expands its customer base among major hyperscalers. The Cloud & Network Services division has improved gross margins due to successful 5G Core implementations. J.P. Morgan also maintains a Buy rating with a €6.10 price target, reflecting confidence in Nokia's transformation and market potential.
Janardan Menon has given his Buy rating due to a combination of factors including Nokia’s strategic transformation and growth prospects. Nokia is shifting its focus from a primarily Radio Access-centric business to one that is increasingly involved in AI data centers through its Optical and IP Networking segments. This shift is expected to drive steady growth and improve the company’s gross margin profile, which in turn could enhance its valuation.
Additionally, the merger with Infinera has positioned Nokia to benefit from rising demand in AI data centers, allowing it to compete more effectively against market leaders. The merger has also expanded Nokia’s customer base to include all major hyperscalers, which is a significant growth driver. The company’s Cloud & Network Services division has shown strong gross margin improvements, mainly due to successful 5G Core implementations and cost reduction efforts. These factors collectively support the upgrade from a Hold to a Buy rating, with an increased target price.
In another report released on October 23, J.P. Morgan also maintained a Buy rating on the stock with a €6.10 price target.
