Finnish telecommunications equipment manufacturer Nokia announced an agreement with American chip giant Nvidia, under which Nvidia will invest $1 billion in exchange for a 2.9% stake in Nokia.
The news triggered a sharp rise in Nokia’s shares, which closed up 20.86%, reaching their highest level in nearly a decade.
Key aspects of the agreement
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The collaboration focuses on artificial intelligence (AI) and networking solutions for data centers. The companies will work together on AI networking solutions and explore opportunities to integrate Nokia’s data center communications products into Nvidia’s future AI infrastructure.
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Nvidia CEO Jensen Huang said the agreement will help make the US the center of the next 6G revolution, praising Nokia’s contribution to bringing telecommunications technology back to America.
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Nokia CEO Justin Hotard, who previously headed Intel’s data center and AI division, expects the new equipment to start generating revenue in 2027 after commercial deployment, starting with 5G and then 6G.
Separately, the companies announced a collaboration with T-Mobile US to develop AI radio technologies for 6G, with testing to begin next year.
Market and analyst reaction
Nokia shares last traded at this high level in January 2016. The deal is seen as a strong endorsement of Nokia’s capabilities. Analyst Paolo Pescatore of PP Foresight noted that next-generation networks such as 6G will play a significant role in enabling new AI experiences.
The investment comes amid expected significant growth in capital spending on data center infrastructure, which McKinsey estimates could exceed $1.7 trillion by 2030, largely due to the expansion of AI.
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