Nokia has unveiled a new strategic plan centered on artificial intelligence, aiming to simplify its operations and boost annual core profit by up to 60% over the next three years. Starting in 2026, the Finnish telecoms equipment giant plans to restructure into two main business units: network infrastructure, dedicated to AI and data centres, and mobile infrastructure, focused on traditional telecom activities.
The company is targeting an annual comparable operating profit of €2.7 billion to €3.2 billion ($3.1–$3.7 billion) by 2028, up from €2 billion last year.
Expanding Beyond Traditional Telecoms
Nokia’s growth plan comes amid a slowdown in global 5G investments. To capitalize on the AI boom, the company acquired U.S. optical networking firm Infinera earlier this year, boosting sales, followed by a $1 billion equity investment from Nvidia, which acquired a 2.9% stake.
Speaking at the firm’s capital markets day in New York, CEO Justin Hotard highlighted strong demand from major cloud providers: “The largest hyperscalers are now investing more each quarter than the largest telcos invest in a year,” noting that nine of the ten biggest cloud providers rely on Nokia’s technology.
Cost Efficiency and Defense Focus
The company also announced plans to create a defense incubation unit to provide secure connectivity for Western countries. Operating expenses are expected to be reduced from €350 million to €150 million by 2028.
Investor Concerns
Despite the ambitious plan, Nokia shares dropped as much as 6% on Wednesday, making it one of the weakest performers on the pan-European Stoxx 600 index, though shares remain up 25% year-to-date. Analysts suggested the market may have expected more radical changes. Atte Riikola of Inderes noted that “market expectations were higher after a strong share price increase,” while Paolo Pescatore of PP Foresight highlighted concerns over the significant investment in AI and uncertain returns.
Nokia’s strategy signals a push to diversify beyond core telecoms, leveraging AI and cloud demand while streamlining operations to secure future profitability.