Why Did Nokia Stock Soar This Week?
Key Points
Nokia announced earlier this week that Nvidia is taking a $1 billion stake in the company.
The companies will collaborate on 6G networking technology.
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Shares of Nokia (NYSE: NOK) spiked this week, finishing up 9.7%. The move came as the S&P 500 gained 0.7% and the Nasdaq-100 gained 2%.
After reporting better-than-expected numbers last Thursday, this week, Nokia announced that artificial intelligence (AI) powerhouse Nvidia is taking a $1 billion stake in the company.
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Nvidia backs Nokia
Nvidia's massive investment will help the company "accelerate its strategic plans to advance trusted connectivity for the AI supercycle and other general corporate purposes." That includes the development of next-generation 6G cellular technology.
Nokia has agreed to adapt its 5G and 6G software to run on Nvidia's chips. The company hopes to have a significant presence in the booming AI data center market. While most attention focuses on the chips that power AI models, the networking infrastructure connecting these systems is equally critical.
Image source: Getty Images.
Analysts at Jeffries upgraded Nokia stock to a buy following the announcement.
Nokia has room to grow
Nokia is the latest company to see a major investment from Nvidia, which recently took stakes in Intel and OpenAI, among others. The spike this week makes Nokia stock pricey, but I think it will be justified in the long run with Nvidia in its corner.
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Johnny Rice 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.
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