This Telecom Stock Could Be a Surprising Long-Term Winner as Artificial Intelligence Adoption Accelerates

In today's tech world, Nokia (NYSE: NOK) attracts relatively little attention. After the debut of Apple's iPhone and the ensuing transition to smartphones wiped out its cellular phone business, the company redefined itself as a telecom hardware company. Because of that, it's far less on the minds of consumers -- and investors -- than it was when its handsets were ubiquitous.

However, a new partnership with Nvidia has reignited some Wall Street interest in the stock. It's a deal that could support Nokia's move into artificial intelligence (AI), foster a long-awaited recovery, and make the stock a long-term winner.

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Nokia as an AI company

Nokia's focus on telecom equipment turned it into a critical player in the communications industry, but more recently, it has pivoted again to expand into AI. It has been building partnerships with Verizon and Lockheed Martin, and in early 2025, it purchased Infinera, an optical networking company, for $2.3 billion.

Nonetheless, it is the company's new partnership with Nvidia, which it announced in October, that has helped renew interest in the stock. Under the terms of the deal, Nokia will develop Nvidia-powered AI-RAN (radio access network) technologies, expanding its line of cellular network infrastructure products. This will help optimize existing 5G networks, and foster the innovations that will underpin the transition to the next iteration of telecom technology, 6G. As Nvidia wrote in its press release announcing the deal, "The partnership marks the beginning of the AI-native wireless era, providing the foundation to support AI-powered consumer experiences and enterprise services at the edge."

Financial effects

As part of the partnership, Nvidia also made a $1 billion investment in Nokia at a price of $6.01 per share. The fact that the stock currently trades at a higher level bodes well for both companies.

Moreover, the analyst firm Omdia predicts that the RAN market will grow to $200 billion by 2030. Over its past four reported quarters, Nokia had 19.7 billion euros ($23 billion) in net sales, so the likelihood is that its revenue growth will accelerate from here.

Nokia may already have begun to see faster revenue growth. In the third quarter of 2025, its revenue increased by 12% year over year to 6.0 billion euros ($7.0 billion). By comparison, its revenue growth for the year's first nine months was only 4%.

In the wake of news of the partnership and the company's Q3 results, the stock -- which had been trading fairly flat -- surged. It's now up by more than 45% over the last year.

Furthermore, while its 38 P/E ratio may make Nokia appear expensive, its forward P/E of 18 seems more reasonable, and appears to point to an improving profit picture.

Nokia is a long-term winner

Thanks to Nokia's AI deals and its partnership with Nvidia, its stock may finally be set for long-term growth. Though its recent gains have been impressive, considering its forecast profit growth, Nokia may have only just begun its run as a winner in the AI space.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Nvidia. The Motley Fool recommends Lockheed Martin and Verizon Communications. The Motley Fool has a disclosure policy.