This Former Smartphone Maker Has Quietly Become a Top AI Stock
Key Points
Data centers are great for powering AI model training, but latency issues limit what they can do with real-time AI inference workloads.
Nokia's AI-RAN technology turns cell towers into micro data centers, which makes real-time AI inference more reliable.
Wall Street has been loading up on Nokia stock ahead of the commercialization of AI-RAN technology.
- 10 stocks we like better than Nokia ›
Nokia (NYSE: NOK) used to make smartphones, but the stock's 130% rally over the past year has nothing to do with those consumer products. The company has become a major part of the AI build-out thanks to a new technology that most people don't know about: artificial intelligence radio access networks (AI-RAN).
AI-RAN helps tech giants break through the latency limitations of AI data centers and enables the creation of micro-data centers that scale real-time AI inference. This technology may soon become a hot topic with investors, just as memory chips have recently.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
Image source: Getty Images.
Nokia has Nvidia's backing
Nokia isn't posting impressive overall growth rates right now. It delivered only 4% year-over-year revenue growth in Q1, but its small AI and cloud segment grew by 49%. Demand for optical networking hardware to go into AI data centers has contributed to the stock's rally, but AI-RAN may be the golden opportunity moving forward.
In its most recent report, management highlighted that AI inference demand is growing faster than AI model training demand, and those workloads will require AI-RAN to operate more effectively in real-time scenarios.
The leading hardware player in the AI boom, Nvidia, has taken notice. In October, the chipmaker announced it was making a $1 billion investment in Nokia as part of a partnership that will support the telecom sector's upgrade to AI-native 5G-advanced and 6G networks.
"AI-RAN will revolutionize telecommunications -- a generational platform shift that empowers the United States to regain global leadership in this vital infrastructure technology," Nvidia CEO Jensen Huang said when announcing the investment. "Together with Nokia and America's telecom ecosystem, we're igniting this revolution."
Huang may have more influence on the AI build-out than anyone else. His assertion that AI-RAN will revolutionize telecommunications is a long-term bullish indicator for Nokia.
AI-RAN revenue should arrive soon and quickly surge
The potential of this technology isn't reflected in Nokia's earnings yet. Some investors have been accumulating shares regardless, anticipating a megacycle for this innovation. Nokia said in its Q1 press release that it is on track to launch customer trials later this year, with 10 customers publicly committed to working with it on them.
Telecom giants are among those customers, and backing from Nvidia could speed up adoption and commercialization. Since AI-RAN is designed to upgrade and optimize existing cell towers, there is a large market opportunity. Market research firm Dell'Oro Group anticipates that cumulative AI-RAN spending will reach $35 billion in five years, suggesting rapid growth is coming.
Since AI-RAN solves major bottlenecks for the AI industry, it could translate into higher margins for Nokia. That would be a welcome development -- the company's margins have been hovering below 3% for several quarters.
Should you buy stock in Nokia right now?
Before you buy stock in Nokia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nokia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $396,542!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,299,961!*
Now, it’s worth noting Stock Advisor’s total average return is 931% — a market-crushing outperformance compared to 210% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of July 16, 2026.
Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Recommended Articles
