Nokia’s CEO, Justin Hotard, asserts that the current surge in artificial intelligence investment is not a short-lived bubble but the beginning of a sustained growth period similar to the internet boom of the 1990s. He argues that the fundamental infrastructural needs of AI are creating significant and lasting opportunities for technology companies, particularly in the realm of data centers and networking hardware.
The core of this perspective lies in the massive infrastructural demand generated by AI applications. As businesses increasingly integrate AI to innovate products, enhance their workforce, and optimize supply chains, the need for powerful data centers to support these functions has grown exponentially. This has led to a “supercycle” of investment in the foundational technology required to power AI, a trend that is reflected in Nokia’s recent financial performance and strategic decisions. The company’s strong quarterly earnings, bolstered by demand for optical and cloud technologies, underscore the market’s current trajectory.
Data Center Demand as a Growth Engine
The primary driver behind this long-term growth is the escalating need for data centers. Hotard, who previously led Intel’s data centers and AI group, explains that this demand is creating “growth across the board,” benefiting not only large tech firms but smaller entities as well. He states that the incremental investment is “clearly… caused by data centres,” which has resulted in a “huge step up in volume” for network infrastructure providers. This rising demand for hardware to power AI applications is creating a substantial and expanding market.
Nokia’s Strategic Pivot to AI
In response to this industry shift, Nokia has made significant strategic changes to capitalize on the AI boom. The company’s recent acquisition of the US optical networking firm Infinera is a key part of this strategy, positioning Nokia to better serve the needs of AI-focused data centers. This move marks the most significant strategic step for the Finnish telecommunications company since it sold its mobile phone business in 2013. While mobile networks remain a core part of its operations, Nokia is increasingly embedding AI into its radio access and fiber network systems. The company’s sales to AI and cloud customers now account for 6% of its latest quarterly revenue.
Organizational Restructuring for Innovation
To further support this transition, Nokia established a new Technology and AI organization in September. This division is led by the newly appointed Chief Technology Officer, Pallavi Mahajan, a former Intel executive. The organization is tasked with accelerating AI-driven innovation within the company, signaling a clear commitment to aligning Nokia’s future with the growth of artificial intelligence.
The AI Investment Bubble Debate
Despite the optimism from Nokia’s leadership, some prominent figures in the tech industry have raised concerns about a potential investment bubble. A Bank of America survey found that over half of fund managers believe AI stocks are currently in a bubble. This sentiment is shared by leaders such as OpenAI CEO Sam Altman and Alibaba Co-Founder Joe Tsai. Altman has noted that while there is a “kernel of truth” to the excitement, investors as a whole may be “overexcited.” Tsai has expressed worry about data centers being built on speculation.
Contrasting Perspectives on Market Stability
Hotard, however, dismisses these concerns, maintaining a long-term perspective on the market’s trajectory. He has stated that even if there is a temporary “trough,” the longer-term trends remain “very favourable.” This viewpoint is echoed by other industry leaders like Google CEO Sundar Pichai, who compares the current AI movement to the competitive growth spirals that followed the introduction of major platforms like YouTube and Facebook in the early 2000s. Hotard emphasizes that Nokia is focused on leveraging the “AI supercycle” to continue innovating and building momentum.