Key Points
Nokia stock jumped 12% after announcing agentic AI tools for network management.
The new service lets networks diagnose and repair problems without human technicians.
At current valuations, investors are paying a rich premium for sustained AI momentum.
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Shares of Nokia (NYSE: NOK) were up by 12.1% at 2:30 p.m. ET today. The Finnish telecom equipment and services veteran reached a fresh multi-year high, revisiting prices last seen in the spring of 2009.
The jump was powered by (yep, you guessed it) a new Nokia service that puts AI agents in charge of network management.
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What Nokia's agentic AI actually does
Nokia's agentic AI tools are now available both to internet service providers and consumer-grade home networks. Automated tools can tune up the network's performance, take action based on voice commands, and more. The multi-step analysis of agentic AI systems even lets Nokia's platforms diagnose and repair network problems without involving human technicians.
Internet providers can prevent outages before customers even notice, speed up customer support, and drastically reduce the need to send repair technicians to your home.
"We are fundamentally changing how home and broadband networks are deployed and run," Nokia executive Sandy Motley said in a prepared statement.
Great run, but 91 times earnings is a lot
After Wednesday's big jump, Nokia's stock price has doubled in 3 months and nearly tripled in a year. The stock trades at a lofty 91 times trailing earnings, up from 35x a year ago and 5.1x in May 2023. Nokia has transformed from a Wall Street pariah to an AI-driven market darling.
Nokia has earned its moment in the sun. The agentic AI play is legitimately interesting, adding significant weight to Nokia's AI portfolio. Self-healing networks could drive meaningful revenue growth if telecom providers adopt them widely, and they really could be a game changer for both the user experience and the service provider's high-performance uptime.
But at 91 times earnings, the stock price relies on a long spell of sunny expectations. Investors buying today are betting that Nokia can sustain its AI momentum and grow into that pricey multiple. Those who got in earlier might consider whether the risk/reward has shifted. It might even be time to take some profits off the table at this point.
Should you buy stock in Nokia right now?
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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
