Nokia sees extended IP and Optical demand visibility, but Goldman Sachs awaits execution proof points

Overview

This conference takeaway reviews Nokia's Network Infrastructure opportunity following management discussions at Communacopia + Technology 2026. Goldman Sachs sees encouraging demand and technology signals in IP and Optical, but remains Neutral while awaiting evidence that investment, integration, and AI-RAN opportunities translate into execution and returns.

Core views

Management described continuing supply tightness across IP and Optical, with lead times above 12 months and Optical lead times even longer. Nokia indicated that AI and cloud demand visibility extends into 2027. Goldman Sachs views the IP ramp as important to achieving targets: as IP expands and Nokia broadens its customer base, the firm expects the revenue profile to become progressively less lumpy. Management also reaffirmed confidence in its technology roadmap, citing an OFC-launched multi-rail solution with approximately 25% greater density than alternatives, a criterion it considers important in customer purchasing decisions. Pluggables are gaining commercial traction, supported by positive feedback from equipment already deployed in the field, although they remain a relatively small share of Optical revenue. Nokia considers its offering competitive. Goldman Sachs expects the combined scale of Nokia's and Infinera's Optical operations to provide a further tailwind over the next one to two years through a larger R&D organization and broader engineering resources. Nokia has raised Network Infrastructure investment this year, particularly in R&D, in response to current market opportunities. The report argues that operating leverage should emerge in future years as these investments mature. Infinera integration synergies are running ahead of schedule, but Nokia has elected to reinvest part of that benefit into the business. Goldman Sachs therefore sees the current opex level as reflecting growth opportunities while emphasizing that execution proof points are still needed. On AI-RAN, Nokia sees the potential for a more software-centric RAN architecture, with software running on a hardware platform. The intended strategic benefit is to protect absolute gross profit while improving margins and return on investment over time, as well as accelerating feature deployment by reducing dependence on new silicon-release cycles. Further customer trial activity is expected in 2H26, potentially followed by broader deployments next year and additional industry data around MWC 2027. Goldman Sachs cautions that adoption could take multiple years and would require further evidence before it becomes incrementally more positive. Goldman Sachs is Neutral rated on Nokia with 12-month targets of €8.50 and $9.70 for the ADR, based on a 12x 2HCY27 plus 1HCY28 estimated EV/EBITDA multiple including restructuring. Against prices of €9.24 and $10.62 as of 10 September 2026, the targets imply 8.0% and 8.7% downside, respectively.

Analysis framework

The report synthesizes management commentary from the conference, assessing demand visibility and supply constraints in IP and Optical, product competitiveness and pluggables adoption, the implications of R&D spending and Infinera integration, and the timing of AI-RAN commercialization. It then applies an EV/EBITDA valuation multiple to establish its 12-month price targets.

Methodology notes

• Industry AnalysisSupply-demand framework

  Assessment of supply tightness, lead times, and AI and cloud demand visibility in IP and Optical.

  The report uses supply constraints and the demand outlook into 2027 to explain why Nokia has greater visibility for these businesses.

• Valuation methodsEV/EBITDA valuation

  12x 2HCY27 plus 1HCY28 estimated EV/EBITDA multiple, including restructuring.

  Goldman Sachs applies this earnings multiple to its estimated enterprise value to derive Nokia's 12-month price targets.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Nokia (NOKIA.HE)

  Primary covered company; positioned to benefit from IP and Optical demand visibility, pluggables traction, and Network Infrastructure investment.

  Strengths

  Extended IP and Optical visibility, a multi-rail solution with c.25% greater density than alternatives, and larger combined Optical R&D resources with Infinera.

  Weaknesses

  Pluggables remain a relatively small share of Optical revenue, and current investment levels require execution proof points.

  Comparison

  Management views the multi-rail solution as offering c.25% greater density than alternatives.

  Risks

  Faster or slower Optical and IP growth, Radio Networks profitability changes, and cost-control or capacity-expansion investment outcomes could affect EBIT.

Key data

• IP and Optical lead timesMore than 12 monthsOptical lead times are even higher, according to management.
• AI and cloud demand visibilityInto 2027Management commentary for IP and Optical.
• Multi-rail solution densityc.25% greater density than alternativesManagement views density as an important customer purchasing criterion.
• Nokia 12-month price target€8.50Versus €9.24 as of 10 Sep 2026 close; 8.0% downside.
• Nokia ADR 12-month price target$9.70Versus $10.62 as of 10 Sep 2026 close; 8.7% downside.
• Valuation multiple12x 2HCY27 + 1HCY28E EV/EBITDAIncludes restructuring.

Impact & implications

The report sees IP and Optical demand, product density, and expanded R&D capacity as supportive of Nokia's growth opportunity. However, the benefit to earnings and returns depends on successful execution, cost control, continued segment profitability, and evidence that AI-RAN can progress from trials toward broader deployment.

Risks

• Optical and IP Networks growth could be faster or slower than expected.
• Radio Networks profitability could face incremental tailwinds or headwinds.
• Cost control and planned capacity-expansion investment could create EBIT tailwinds in a strong top-line scenario or headwinds in a weak one.

What to watch

• Execution proof points from higher Network Infrastructure R&D investment and reinvestment of Infinera integration synergies.
• Further AI-RAN customer trials in 2H26.
• Potential broader AI-RAN deployments next year and industry data points around MWC 2027.
• The pace of IP scaling, Optical demand, and pluggables commercial adoption.