Since 2020, Nokia (NOK +2.98%) has experienced increased investor attention, both as a turnaround play and as a meme stock. Still, its 64% rise over the past five years lags behind the S&P 500, which has increased by over 86% during this time frame.
However, in the coming year, shares in the telecom equipment maker could make a serious leap higher, to prices not hit in well over a decade.
Image source: Getty Images.
Wall Street's whipsaw reaction to Nvidia news
Back in late October, Nvidia announced plans to invest $1 billion into the company to "enable accelerated development and deployment of next generation AI native mobile networks and AI networking infrastructure."
NYSE: NOK
Key Data Points
Given the implications of Nokia working with a top AI winner in its own AI endeavors, it's not surprising that Nokia shares soared from around $6 to as much as $8.19 per share on the news. Even as the stock has since given back these gains -- it closed Dec. 9 at $6.18 -- don't underestimate the potential impact of this emerging AI catalyst.
$10 per share is within reach for Nokia in 2026
In the quarters ahead, if Nokia posts strong results and guidance, as well as promising updates about its AI pivot, another surge may be in store. Sell-side analyst estimates already call for Nokia to experience 25% earnings growth in 2026.
Depending on the extent of Nokia's AI progress, shares, now trading at a forward P/E of around 13, could experience major valuation expansion. Other AI networking stocks trade for more than 30 times forward earnings estimates.
Even if the stock experiences just a modest rerating, to a forward P/E in the mid-to-high 20s, this would result in the stock climbing to prices north of $10 per share. You may want to wait for further near-term weakness, but keep Nokia on your radar in 2026.
