Nokia makes its biggest bet on AI as it shifts its focus to the infrastructure end of the sector

Nokia is reportedly making a major strategic pivot that shifts the company’s focus to capitalizing on the AI boom, particularly via its network infrastructure business, according to plans announced at its Capital Markets Day, which took place on Wednesday, November 19, 2025.

Nokia used to be known primarily for its extremely durable phones, but the company has suffered since the advent of smartphones, and now it is streamlining its business to focus on networking infrastructure that can connect AI data centers.

The move is expected to deliver double-digit operating income growth in the coming years, Chief Executive Officer Justin Hotard told Bloomberg News, ahead of the company’s capital markets day on Wednesday. 

By 2028, all that growth will have Nokia generating an annual operating profit that ranges from €2.7 billion ($3.1 billion) to €3.2 billion. 

Nokia plans to use the AI boom to achieve renewed relevance 

In the meantime, the Finnish company says it will prune the business, selling off underperforming parts and combining its four existing segments into two main divisions, which will focus only on mobile networks and network infrastructure.

The network infrastructure unit will supply fiber connections with the ability to carry large volumes of data required for AI workloads, while the mobile networks unit comprises Nokia’s legacy business of supplying the backbone kit for phone connectivity.

The move takes effect from January, and Hotard says it will align the company “where we see the opportunity.” 

“We’re doubling down on being a focused connectivity infrastructure provider — you can’t win in connectivity without winning in AI,” he said.

Nokia’s pivot comes as it has struggled in recent years to convince investors that its main mobile network business is able to fuel growth. The AI boom presents an opportunity for the Finnish company to focus on providing crucial infrastructure that the sector needs. 

Already, it has been benefiting from the pivot as Bloomberg reported that AI and cloud customers accounted for 6% of the company’s net sales in the third quarter, eliminating any doubts as to whether the sector presents “the biggest opportunity” for the business.

Nokia has made crucial moves to sustain its AI venture 

Nokia may have spent years struggling during its post-mobile-phone era and slower 5G growth, but with its recent moves, the company has repositioned itself as a key enabler of the physical networking backbone for the AI revolution. 

Part of those moves includes a recently struck $1 billion deal with Nvidia Corp., the world’s most valuable firm, which gave the chip giant a 3% stake in the company. Last year, Nokia also acquired Infinera Corp. to expand into networking products for AI data centers, and it hired Finland’s former ambassador to the US to market defense connectivity to governments.

The company’s AI-focused unit has been under the leadership of David Heard and includes its cloud and network services business. The head of that business, Raghav Sahgal, will become Nokia’s chief customer officer.

For now, Nokia’s mobile networks business is “flat,” but Hotard has said it will undergo changes that will reorient it around AI. It will also absorb Nokia’s profitable patents department, Nokia Technologies, from January 1, and Hotard will lead the unit on an interim basis after the departure of its top executive, Tommi Uitto.

“Overall, when you look at the business, the business hasn’t generated an acceptable return, not for us, certainly not for our shareholders,” Hotard said. It’s a “great core technology, but not yet a great business, and I think the principle there is we need to build a better business in the portfolio rather than necessarily just a larger one.”

Nokia’s defense business, which has been described as an “incubator,” will remain a standalone unit and is not expected to generate revenue comparable to the other segments.

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