JPMorgan reiterates Overweight on Nokia and sharply raises price target

Overview

This is a JPMorgan company research report on Nokia. The report's core view is that Nokia's optical and IP network orders from AI and cloud customers have strengthened significantly, which could cause revenue and profit in 2026 and beyond to exceed current market expectations. Based on a higher earnings scenario and valuation multiple, JPMorgan maintains its Overweight rating and raises the common share price target from €6.90 to €12.00 and the ADR price target from $8.20 to $14.00.

Core views

The report believes Nokia's growth momentum has not yet peaked. 1Q26 AI and cloud orders were about €1.0bn, while sales in the quarter were about €350m, indicating that orders are running well ahead of revenue and building backlog. If quarterly AI and cloud orders remain around €1.0bn, AI and cloud revenue could reach about €1.0bn in 4Q26 and about €4.0bn in 2027. Since this business has gross margin in the mid-40% range and a relatively high fixed-cost base, about 40% of incremental revenue could convert into profit, driving significant margin expansion in the Network Infrastructure business.

Analysis framework

The report uses a scenario analysis and valuation re-rating framework: it first derives future revenue from 1Q26 AI and cloud orders, delivery cycles, book-to-bill ratio, and backlog; then separates AI and cloud from non-AI businesses to estimate IP and optical network revenue growth; next calculates Network Infrastructure EBIT and group EPS based on gross margin, R&D, and SG&A investment; and finally derives the Dec-27 price target using 2028 adjusted EPS and a target P/E multiple.

Methodology notes

• Scenario analysisAI and cloud order-to-revenue scenario

  Use orders, book-to-bill ratio, delivery cycle, and backlog to derive future revenue.

  The report assumes AI and cloud orders remain around €1.0bn in each quarter of 2026 and considers a 12-18 month delivery cycle for optical networks, thereby estimating 2026-2028 AI and cloud revenue and total IP and optical network revenue.

• Earnings leverage analysisOperating leverage and incremental profit conversion

  The amplifying effect of revenue growth on EBIT and EPS in a fixed-cost business.

  The report believes AI and cloud business gross margin is around the mid-40% range, and after deducting additional R&D and SG&A expenses, about 40% of incremental revenue can directly contribute to profit.

• Valuation methodsP/E target price method

  Derive the target price by multiplying 2028 adjusted EPS by the target P/E multiple.

  The report raises the target multiple from 16x previously to 26.5x, corresponding to current 2028 adjusted EPS of €0.45; in the upside scenario, 2028 EPS could reach about €0.55, and a sub-20x P/E could support a €12 target price.

Asset mapping & comparison

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

• NOKIA FH / NOKIA.HE

  Core covered asset

  Strengths

  Strong AI and cloud orders, accelerating IP and optical network growth, high operating leverage in the Network Infrastructure business, and a sharply higher price target.

  Weaknesses

  The valuation multiple is already significantly above the company's historical level, and part of the growth depends on supply chain delivery and order sustainability.

  Comparison

  The report believes that if 2028 EPS reaches €0.55, a sub-20x P/E could support a €12 target price; the current target multiple is 26.5x 2028E adjusted EPS.

  Risks

  Telecom operator capex weaker than expected, loss of share in network businesses, competitive pressure, and deterioration in free cash flow and net cash.

• NOK US ADR

  ADR mapping of the same company

  Strengths

  Benefits from the same fundamentals and price target increase, with the ADR target price raised to $14.00.

  Weaknesses

  ADR performance may also be affected by exchange rates and cross-market valuation differences.

  Comparison

  The ADR target price was raised from $8.20 to $14.00, versus the current price of $10.33.

  Risks

  In addition to company fundamental risks, also includes exchange rate risk, ADR liquidity risk, and cross-market premium/discount risk.

• Optical Networks and IP Networks

  Key growth businesses

  Strengths

  Strong demand for optical networks in AI data centers, and design wins in switching could convert into orders and revenue.

  Weaknesses

  Optical network delivery cycles are 12-18 months, and supply chain constraints may delay revenue recognition.

  Comparison

  The report's scenario shows AI and cloud could push 2026 IP and optical network revenue growth to about 27.6%, above guidance of 18%-20%.

  Risks

  Orders may not continue, customer delivery schedules may slow, supply chain bottlenecks may emerge, or competition may intensify.

Key data

• Report date2026-04-27Europe Equity Research.
• RatingOverweightJPMorgan reiterates its Overweight rating.
• Target price€12.00 / $14.00Dec-27 target price; previously €6.90 / $8.20.
• Current price€8.95 / $10.33Common share price as of 2026-04-24; ADR price as of 2026-04-23.
• 1Q26 AI and cloud ordersabout €1.0bnBook-to-bill ratio close to 3x, indicating growing backlog.
• 1Q26 AI and cloud salesabout €350mSales significantly lagged orders, mainly due to delivery cycles.
• Company guidance for IP and optical network growth18%-20%Already raised from the previous 10%-12%.
• 2026 IP and optical network growth in the report's upside scenarioabout 27.6%Assumes AI and cloud sales reach about €1.0bn in 4Q26, with the non-AI segment flat year over year.
• 2027 AI and cloud revenue scenarioabout €4.0bnAssumes quarterly orders remain around €1.0bn.
• 2026 operating profit forecast€2,407mCompared with company guidance of €2.0-2.5bn, slightly above the midpoint.
• Group revenue forecast revision+2% / +3% / +6%Corresponding to FY26 / FY27 / FY28, mainly driven by the Network Infrastructure business.
• Group operating profit forecast revision+1% / +4% / +7%Corresponding to FY26 / FY27 / FY28.
• 2028 adjusted EPS€0.45; upside scenario €0.55The price target uses €0.45, while scenario analysis indicates further upside potential.

Impact & implications

If AI and cloud orders continue converting into revenue, Nokia may raise its IP and optical network growth guidance again and show stronger margin and EPS elasticity in 2027-2028. The report believes this would support a re-rating of the stock from its historical valuation range to higher multiples, shifting Nokia from a traditional communications equipment company to a multi-year compound growth story with AI infrastructure exposure.

Risks

• Telecom operator capex weaker than expected, leading to downside in revenue and earnings forecasts.
• Nokia's network business suffers market share loss or increased competitive pressure.
• Deterioration in free cash flow and net cash position.
• AI and cloud orders fail to remain around the quarterly €1.0bn level, or the order-to-revenue conversion pace is slower than expected.
• The 12-18 month delivery cycle for optical networks and supply chain constraints may affect revenue recognition.
• The target valuation multiple is above Nokia's historical level; if earnings delivery falls short, there is a risk of valuation pullback.

What to watch

• Whether AI and cloud orders in subsequent quarters of 2026 remain at or exceed about €1.0bn.
• Whether IP and optical network revenue growth guidance is raised again from 18%-20%.
• Progress in converting optical network and data center switching design wins into actual orders and revenue.
• Whether gross margin, EBIT margin, and operating leverage in the Network Infrastructure business are delivered.
• Whether Mobile Infrastructure margin recovers to the FY24 level, thereby driving group EPS toward the €0.55 scenario.
• Changes in free cash flow, net cash, and shareholder returns.