A $1 billion stake in Nokia, NVIDIA eyes "6G," networks becoming increasingly important in the AI race

NVIDIA is incorporating Finnish telecommunications equipment manufacturer Nokia into its vast artificial intelligence ecosystem through a strategic investment of $1 billion.

According to an announcement released by Nokia on Tuesday, NVIDIA will subscribe to 166.4 million new shares of Nokia at a price of $6.01 per share, totaling an investment of $1 billion, which will give the Finnish company a 2.9% stake. This deal will make NVIDIA the second-largest shareholder of Nokia.

The two parties will collaborate to develop AI network solutions and explore the possibility of integrating Nokia's data center switching and optical technology into NVIDIA's future AI infrastructure architecture. At the same time, their collaboration will jointly target next-generation 6G technology, indicating that the integration of AI and communications will deepen further.

Upon the announcement, the capital market quickly reacted positively. Nokia's stock price soared over 20% at Tuesday's close, reaching its highest point since January 2016. Meanwhile, NVIDIA's stock price also recorded an increase.

NVIDIA CEO Jensen Huang boldly stated at the GTC conference in Washington that this collaboration will help "make the United States the center of the next 6G revolution."

Targeting 6G, Deep Integration of AI and Communications

One of the most striking focuses of this collaboration is the joint layout for the next-generation mobile communication technology "6G." Jensen Huang explicitly linked this collaboration to the United States' leadership position in the 6G field.

Nokia CEO Justin Hotard stated in an interview with Reuters that the new equipment is expected to start contributing revenue from 2027, with the initial commercial deployment of 5G, followed by 6G. Additionally, Nokia and NVIDIA announced that they will collaborate with T-Mobile US to jointly develop AI radio technology for 6G, with related trials scheduled to start next year.

Analyst Paolo Pescatore from PP Foresight believes that this deal is a "strong endorsement" of Nokia's capabilities and pointed out that "next-generation networks like 6G will play an important role in empowering new AI experiences."

The New Battlefield of AI Competition: Network Infrastructure

NVIDIA's investment highlights an increasingly clear trend: in the AI race, the importance of networks is on par with computing power itself. As AI participants seek to move data more quickly within and outside chip clusters, the demand for connectivity solutions is growing.

Jensen Huang himself emphasized during the earnings call that "the network is clearly very important in the AI factory." He believes that the performance improvements brought by choosing the right network can even "make the network itself free." Nokia's recent financial report also corroborated this trend, as sales of its network infrastructure equipment surged due to increased demand from North American AI and data center customers.

According to consulting firm McKinsey, global capital expenditures on data center infrastructure are expected to exceed $1.7 trillion by 2030, with most of the growth driven by AI expansion NVIDIA aims to ensure its dominance in AI infrastructure from chips to network levels through its collaboration with Nokia.

NVIDIA to Become Nokia's Second-Largest Shareholder

According to the terms of the deal, NVIDIA will become Nokia's second-largest shareholder, but the partnership is non-exclusive. This means Nokia can continue to use its existing suppliers like Marvell for chips.

Mads Rosendal, a credit research analyst at Danske Bank, pointed out that although NVIDIA's chips may be more expensive, considering NVIDIA's significant share in the U.S. data center market, this partnership is mutually beneficial for both parties.

For Nokia, this investment will fund its "advancement of trusted connectivity in the AI supercycle" and accelerate its development of 5G and 6G RAN software on NVIDIA's architecture.

This investment is also a continuation of NVIDIA's recent series of large-scale investments. Previously, NVIDIA had committed to investing $5 billion in Intel and plans to invest up to $100 billion in OpenAI over the next few years