Copyright yle
US tech giant Nvidia is set to spend one billion US dollars in acquiring a nearly three-percent stake in Finnish networking firm Nokia — as part of a broader agreement focused on developing AI and data centres, the companies have announced. In a press release about the partnership, Nokia said it "marks the beginning of the AI-native wireless era". The release added that the two companies are set to build infrastructure for the next generation of of wireless "AI-native 5G-advanced and 6G" communications technology. "The move will enable massive improvements in performance and efficiency, helping ensure that consumers using generative, agentic and physical AI applications on their devices will have seamless network experiences. It will also support future AI-native devices, such as drones or augmented- and virtual-reality glasses while being ready for 6G applications such as integrated sensing and communications," Nokia's release read. Nvidia has become a key part of the development of AI tech. With a nearly 4.9 trillion US dollar market cap, the American firm has become the most valuable company in the world. Meanwhile, Nokia's market capitalisation currently stands at just under 42 billion US dollars. Reuters reported on Tuesday that the investment news make Nokia's stock shares "hit their highest level in nearly a decade". The purchase boosted Nokia stock by more than 20 percent on Tuesday, after seeing a 10-percent uptick in share prices last week after issuing a profit report. Nokia's value rose even more on the New York exchange on Tuesday, where its share prices had risen by 25 percent by 9pm Finnish time. Analyst: "What a relief!" Speaking to Yle on Tuesday from New York, market analyst Tero Kuittinen said "what a relief"! Kuittinen has tracked Nokia for decades and clearly remembers the company's golden era in the late 1990s and early 2000s, when it was 'connecting people' as the biggest cell phone manufacturer in the world. But after losing out on the mobile handset market to iPhone and Android, Nokia has struggled to find its footing for decades. "Nokia's future has really looked bleak — now it needs big strategic partners. Nokia has had a bad history with acquisitions and it's better that things are headed in the other direction now," Kuittinen said. He added that at this point, expectations for Nvidia's further growth are so high that it is forced to build new businesses, or risk disappointing the market. As it stands, Nvidia already makes up around nine percent of the combined market value of all listed companies in the US, Kuittinen explained, and needs to "eat the world" and aggressively expand. Otherwise, the expectations for growth will not be realised. "Nvidia has started investing in so-called 'losers' — companies that are considered weak, like [French AI startup] Mistral and [struggling US chip giant] Intel. Nokia fits into the same category," Kuittinen said. Big for Nokia, 'lunch money' for Nvidia According to Kuittinen, a billion dollars is a large sum, but only "lunch money" to a company as large as Nvidia. "The company is so powerful that it can throw around one to five billion dollars. It has the freedom to try anything," the analyst said. On the other hand, a billion-dollar investment is hugely significant for Nokia — as it was for Mistral and Intel, Kuittinen noted. "This is a big deal for Finland, because Ericsson has been crushing Nokia in recent years. [Swedish network firm] Ericsson made huge gains with, for example, with the American [telecoms] AT&T and Verizon. Now there is hope that the dynamics could change," Kuittinen told Yle. Nokia has already been surpassed by Chinese firm Huawei in rolling out networking tech across South America, Africa, the Middle East, Asia and other emerging markets, according to Kuittinen. "Now there's hope that Nokia will get its product development back on track, like they did 20 years ago. Currently, the energy consumption and other features of Huawei's networks are ahead of Nokia's," he explained. Part of what Nvidia is bringing to the table is a technology the company has dubbed "AI-Ran". It is designed to offer fast AI response times for anticipated mobile data traffic generated by smartphones, cameras, robots, drones, smart glasses and other data-hungry applications. Nokia, on the other end of the table, is developing the successor in mobile connectivity, 6G network technology. Nvidia's founder and CEO, Jensen Huang, said that telecommunications is a "critical national infrastructure — the digital nervous system of our economy and security". "Built on NVIDIA CUDA and AI, AI-Ran will revolutionize telecommunications — a generational platform shift that empowers the United States to regain global leadership in this vital infrastructure technology. Together with Nokia and America’s telecom ecosystem, we’re igniting this revolution, equipping operators to build intelligent, adaptive networks that will define the next generation of global connectivity," Huang said in an Nvidia release. Justin Hotard, president and CEO of Nokia, said the partnership would change what the next generation of mobile tech will be able to offer. "The next leap in telecom isn’t just from 5G to 6G — it’s a fundamental redesign of the network to deliver AI-powered connectivity, capable of processing intelligence from the data center all the way to the edge. Our partnership with NVIDIA, and their investment in Nokia, will accelerate AI-Ran innovation to put an AI data center into everyone’s pocket,” Hotard said in Nvidia's release.
