In short: New long on a sum-of-the-parts — bought in the alerts on Friday. "Nokia, which is the biggest optical business that competes with Ciena. The reason why it trades so cheap is it has a legacy mobile business." The comp: "Ciena trades at a 50 billion market cap and has only done about 1 billion of EBITDA this year… 50 times trailing… about 1.4 billion of EBITDA next year… a 36 times forward multiple, and if you were to value Nokia's optical segment at a similar kind of 35 to 40 times multiple… Nokia is probably worth around $13 a share" — "from where Nokia is currently trading around 10.68 after the big AI pullback in the summer… about 20% upside." His grading is candid: "So this one's not as interesting, but it's also one of the lower volatility AI names. This is not a name that's going to sell off 20, 30% in short order." The week's news flow is the support: AI-RAN trials with operators across four regions and an expanded Microsoft partnership on agentic AI in telecom networks — "one of the reasons why we like Nokia, it keeps announcing new contracts… another Nokia deal, by the way."
Nokia no longer makes phones. It sells the equipment that telecom networks run on — mobile base stations, and also fibre-optic and internet-routing gear that connects data centres. The optical business competes directly with Ciena, and it is growing fast because AI data centres need enormous amounts of fast connections between them.
Singh's method is a "sum of the parts": value each piece of a company separately and add them up. Ciena is valued at about 36 times next year's earnings before interest, tax and depreciation. If you give Nokia's optical unit a similar multiple, that unit alone justifies about $13 a share — more than the whole company's price of about $10.68, which still carries the slow-growing mobile business as well.
He is honest that it is not his most exciting idea: roughly 20% upside. What he likes is the combination of that hidden value with lower risk — the older business is stable, so the stock should not crash 20-30% in an AI sell-off — plus a steady run of new contracts, including this week's expanded partnership with Microsoft.
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In short: Same list, same status — a historical example of a market-share leader that did not survive as a hold. Niles: "you never have people on that say AOL was a buy and hold. Yahoo was a buy and hold. Nokia was a buy and hold. Cisco was a buy and hold."
28:38because you don't know that you have a lot of survivability. You hear from the people who said, "Oh yeah, Apple was a buy and hold." Well, you never have people on that say AOL was a buy and hold. Yahoo was a buy and hold. Nokia was a buy and hold. Cisco was a buy and hold. The list is really long of market share leaders. IBM was a buy and hold, of market share leaders that then went into trouble. But you always have some company that makes it through, right? Microsoft has done great through three different decades, right? But that's one company.
In short: The losing half of his downside-protection pairing, used only as history: "Nokia was a buy and hold"; "you don't know if you're holding the next Apple or you're holding the next Nokia."
56:22lot of survivability bias. You hear from the people who said, "Oh, yeah, Apple was a buy and hold." Well, you never have people on that say AOL was a buy and hold, Yahoo was a buy and hold, Nokia was a buy and hold, Cisco was a buy and hold. The list is really long of market share leaders.
In short: New add as "an interesting AI option play, just like Intel was trading very, very cheaply and then it pivoted to AI and CPUs and silicon and then it rallied. We think that Nokia is kind of a sleeper name where it does have a new AI story and it's trading relatively cheap to that potential TAM."
Nokia is a telecom-equipment maker that the market treats as a slow, cheap, unexciting business. Singh bought it as what he calls an option: you pay very little for the possibility of a re-rating, and lose little if it never comes.
The template he names is Intel — a stock that traded very cheaply, then pivoted its story toward AI chips and silicon and rallied hard on the narrative change rather than on immediate profits. He thinks Nokia is "a sleeper name" with a new AI story that is cheap relative to the market it could address.
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In short: The loser side of the trade that made his career and won him Jim Balsillie's seed capital: in the 1990s he worked out that BlackBerry "were going to disrupt Nokia, just like Nokia had disrupted Motorola before them." Historical who-wins-who-loses reference.
5:40And so, yes, so Jim definitely was the lead order to get us going and so very thankful — And he's going to be coming up on our series about Canadian innovation. So that's so interesting. You didn't know him really before. Well, I met him in the 90s as my day job trying to figure out who wins and who loses and was able to figure out that they were going to disrupt — Nokia back in the '90s, just like Nokia had disrupted Motorola before them.
In short: Q&A: "of all the AI names, probably the least interesting" and not first to rally — but ~30% of revenue (optical + IP networks) grows 10-12% and earnings could grow ~14% on Infinera synergies. JPM's €18 target implies a rich 29× P/E, but on a PEG basis "Nokia actually looks interesting" — a momentum-reversion name "to do more work on."
Asked about Nokia, Singh calls it "the least interesting" AI name and not the one to rally first. But there's a case: about 30% of its revenue (optical and internet-protocol networking gear) is growing 10-12%, and earnings could grow ~14% helped by cost savings from its Infinera acquisition. On a growth-adjusted valuation measure ("PEG") it looks interesting even if it seems expensive on plain earnings — so it's a possible momentum-reversal name "to do more work on," not a conviction buy.
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