Why Nokia
Nokia has made a shift from a legacy hardware manufacturer to an AI and Defence player. The stock price has began correcting, but still lags behind.
PE Valuation
Nokias current PE is sitting at 26 with the price of $13.4. It has taken a move away from its previous telecom equipment valuation, which had comparables such as Ericsson sitting at 17. It’s currently shifting towards an optical infrastructure valuation, which leaves comparables such as ciena (216 PE) and Arista networks (54 PE). Right now Nokia is sitting in the transition phase, where we are left waiting to see where its valuation lands.
If we see the rewrite landing us on the low side of 54, that brings us to the potential price of ~$26.8, as long as development continues and Nokia is taken seriously as an AI infrastructure player. As of now, most people still struggle to see it as more than just a telecoms company, or an old phone company. If it does break away from its previous identity, I do see the rewrite of its AI valuation playing out.
The Defence sector.
Nokia has made a large shift towards the Defence sector, currently using 5G and AI, and will continue to develop themselves in this space Via 6G and AI-RAN.
They have a dedicated branch (Nokia Federal Solution) that is dedicated to serving the US government.
Their current defence partnerships are the US government, Lockheed Martin, NVDA, and Motorola (UK defence development)
What comes next
As for what comes after, I don’t think it’s really possible to put a price target on AI-RAN yet. If it is successful at what it aims to do, they will not only operate as an AI foundation, but also as an AI supplier via the 6G network centres if they achieve their goal. We will see a brand new revenue stream similar to cloud monetization. It’s impossible to put a price target on it, because we have no comparable, and it will be the first of its kind.
If everything goes to plan, we could potentially see the $26.8 rewrite in the somewhat near future, with the potential of going much higher depending on how AI-RAN and partnerships play out.
Positions
35,403 shares
288x $10JAN28
123x $15JAN28
I will also be adding more throughout the revaluation.
NFA.
Godspeed.
