Citigroup: Nokia's transition to AI is a positive move, but the goal is disappointing.

Citigroup analysts Andrew M. Gardiner and Daniel Schafei wrote that Nokia's AI transformation and product portfolio rationalization are positive moves, but some investors had previously expected the targets for 2028 to be more robust. The company outlined plans to further develop AI, focusing more on the growth of optical networks and IP networks, while integrating its mobile division to encompass core and IP licensing businesses, and rationalizing smaller loss-making operations. The firm believes that the simplification of the structure is a positive step, but points out that the company's target comparable operating profit of 2.7 to 3.2 billion euros in 2028 only roughly meets market expectations. "Our interactions with investors indicate that the market has been expecting stronger growth and profit margins from AI-driven optical networks and IP business lines, while Nokia currently forecasts a compound growth rate of 10%-12% for these business lines between 2025 and 2028." The stock rose 2%.