Strategic analysis & implications for AI-driven network infrastructure
Publish Date: November 2025
In November 2025, Nokia announced a bold strategic realignment during its Capital Markets Day, signaling its intention to become a leader in AI-powered network infrastructure. The move comes as traditional telecommunication network equipment vendors, including Nokia and Ericsson, have faced declining revenues in recent years with declines in operator capital expenditures. At the same time, investments in cloud computing, AI, and data centers have accelerated at an unprecedented pace.
A sweeping reorganization, effective 1 January 2026, is central to the new strategy. Nokia will consolidate its business into two primary segments.
This segment covers optical, IP, and fixed networks. It will be led by David Heard, formerly CEO of Infinera, which Nokia acquired in 2024. Nokia forecasts a 9% revenue growth rate for NI between 2025 and 2028, fueled by demand for AI and cloud connectivity and for mission-critical networks, including defense.
This segment includes core networks, radio access networks, and technology standards such as Nokia's intellectual property portfolio. Hotard will lead the unit until a permanent head is appointed. While continuing to support telecom operators, utilities, and railway operators, MI will focus strategically on developing 6G AI RAN technology with Nvidia, using CUDA libraries and accelerated GPU-based computing platforms. The higher unit costs of the GPU-based approach relative to traditional ASIC approaches will be offset by GPUs' compute power and flexibility, which support advanced AI algorithms to improve radio performance and service delivery. Nokia expects only around 1% growth in MI through 2028, consistent with a broader industry outlook of stagnant demand for mobile network infrastructure.
Nokia also plans to move non-profitable businesses, including private wireless and enterprise edge solutions, into a separate "Portfolio Businesses" category, because they are no longer considered central to the company’s future direction.
Nokia is clearly targeting growth in AI-enabled infrastructure, where its Network Infrastructure business is well-positioned to benefit. However, it remains uncertain whether such a major strategic overhaul was necessary to capture this opportunity. With 76% of current revenue still coming from telecommunications, Nokia risks destabilizing its core business during a period of rapid transition.
The strategy that Nokia presented for its MI unit, which will account for 54% of its revenues, seemed incomplete and overly aspirational. Hotard will run the unit in the interim, presumably until they find a suitable leader, and the MI unit will emphasize the development of 6G AI-RAN through its commitment to Nvidia and Nvidia ecosystem. It is worth noting that other radio vendors, including Ericsson, are also working with Nvidia on 6G AI-RAN, but with less commitment. While there was a robust discussion about the mobile core and progress with 5G Standalone (5G-SA) upgrades at the Capital Markets day, very little was said about the evolution from the current ReefShark-based Airscale platform to future proposed Grace/Blackwell solution. To the attentive observer, it is clear that ReefShark is here to stay for many years, and therefore its migration has to be an important element of the Nokia strategy. It was indicated that one seamlessly upgrades to the other, but presumably that effectively involves some kind of ‘base station – brain transplant'.
Nokia's treatment of the Private Wireless business appears overly blunt and lacking in strategic nuance. While the company has chosen to retain segments such as defense, rail, and utilities, it has deprioritized other verticals, including manufacturing and ports, despite years of commercial engagement and ecosystem development in those areas. Understandably, segments with limited profitability have been excluded from the core strategy, but a more selective and surgical approach might have preserved opportunities that closely align with Nokia’s emerging ambitions. In particular, sectors such as manufacturing could provide ideal environments to incubate and scale 6G AI RAN innovations ahead of broader adoption in traditional telecom markets. By taking such a broad-brush approach to its private wireless portfolio, Nokia may be narrowing its ability to capture early high-value use cases that could prove essential to its long-term success in AI-powered mobile networks. In addition, our forecasts indicate that the private wireless infrastructure market will grow at a compound annual rate of 26% over the next five years, and Nokia remains a dominant player that is well positioned to capture this opportunity.
Nokia's updated strategy is bold and aligns with the massive shift in investment toward AI and digital infrastructure. However, it carries substantial execution risks and may underestimate the importance of maintaining momentum in its existing telecommunications business. Success will depend on Nokia's ability to capture new AI-driven growth while protecting and evolving the revenue streams that continue to sustain the company today.
