$1 billion investment in Nokia, NVIDIA targets "6G," networks become increasingly important in the AI race

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Nvidia is integrating Finnish telecom equipment manufacturer Nokia into its vast artificial intelligence ecosystem through a $1 billion strategic investment.

According to a statement released by Nokia on Tuesday, Nvidia will subscribe to 166.4 million newly issued Nokia shares at a price of $6.01 per share, totaling a $1 billion investment and acquiring a 2.9% stake in the Finnish company. This deal will make Nvidia Nokia's second largest shareholder.

The two parties will collaborate on developing AI network solutions and explore the integration of Nokia’s data center switching and optical technologies into Nvidia’s future AI infrastructure architecture. At the same time, their collaboration will jointly target next-generation 6G technology, signaling a further deepening merger between AI and communications.

This news triggered a swift and positive reaction in the capital markets. Nokia’s share price soared more than 20% at Tuesday’s close, reaching its highest level since January 2016. Meanwhile, Nvidia’s share price also rose.

Nvidia CEO Jensen Huang stated prominently at the GTC conference in Washington, this collaboration will help "the United States become the center of the next 6G revolution."

Aiming for 6G: Deep Integration of AI and Communications

One of the most compelling aspects of this collaboration is the joint layout of both parties for next-generation mobile communication technology "6G." Jensen Huang clearly linked this collaboration with U.S. leadership in the 6G field.

Nokia CEO Justin Hotard told Reuters that the new equipment is expected to start contributing revenue from 2027, starting with commercial deployment of 5G and then moving to 6G. In addition, Nokia and Nvidia also announced plans to work with T-Mobile US to jointly develop AI radio technology for 6G, with related trials set to begin next year.

Paolo Pescatore, an analyst at PP Foresight, believes that this deal is a “strong endorsement” of Nokia’s capabilities and points out that "next-generation networks like 6G will play a key role in enabling new AI experiences."

The New Battlefield in the AI Race: Network Infrastructure

Nvidia’s investment highlights an increasingly clear trend: network importance is now on par with computing power in the AI race. As AI players seek faster movement of data both within and outside chip clusters, the demand for connection solutions continues to grow.

Jensen Huang himself also emphasized during an earnings call: "In AI factories, networking is absolutely crucial." He believes that performance improvements from choosing the right network can even "make the network itself free." Nokia's recent financial reports also confirm this trend, with sales of its network infrastructure equipment surging due to soaring demand from AI and data center customers in North America.

According to consulting firm McKinsey, by 2030, global capex in data center infrastructure is expected to exceed $1.7 trillion, with most of the growth driven by AI expansion. Through collaboration with Nokia, Nvidia aims to ensure its dominant position in AI infrastructure extends from chips to the network layer.

Nvidia to Become Nokia's Second Largest Shareholder

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

Mads Rosendal, credit research analyst at Denmark Bank, noted that although Nvidia’s chips may be more expensive, considering Nvidia’s huge share in the U.S. data center market, the partnership is mutually beneficial.

For Nokia, the investment will provide funding for "advancing trusted connectivity in the AI supercycle" and accelerate the development of 5G and 6G RAN software on Nvidia's architecture.

This investment is also part of a recent series of bold moves by Nvidia. Previously, Nvidia had committed to a $5 billion investment in Intel and plans to invest up to $100 billion in OpenAI over the next few years.

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