DOSSIER

TECH

Nokia resurrected, riding the wave of AI

All of them were stars of the dot-com era before fading into the background with the bursting of the bubble and the emergence of a new generation of tech darlings. But Dell Technologies, Nokia, and Lenovo are back in full force, thanks to the relentless boom in spending on artificial intelligence.

The race to build AI infrastructure has led to a dizzying increase in demand for everything from computer servers to storage components, networking equipment, and even old chips. This has resulted in a frenetic rise in stocks worldwide with any kind of exposure to these areas.

The latest wave has taken iconic tech names from the 1990s, including many of the so-called "Four Horsemen"—a group considered the equivalent of the Magnificent Seven at the time.

In addition to Dell, Nokia, and Lenovo, other dot-com era stars that have returned to shine this year include Micron, Intel, Texas Instruments, and Cisco. In total, these seven stocks have surged by an average of 158% by 2026, adding a combined market value of $1.7 trillion.

“About six months ago, we started to realize that the expansion of AI infrastructure is really expanding, and there’s a huge supply shortage, especially in the more basic hardware sector, where capacity growth has been very limited in recent years,” said Yan Taw Boon, portfolio manager at Neuberger Berman. “But demand is skyrocketing — from ‘boring’ CPUs to networks, passive components, storage, and memory.”

From manufacturers of cell phones considered outdated to a reinvented producer of chips for calculators, these are some of the “retro” tech stocks that are making an impressive comeback:

Dell shares surged 33% on Friday, the biggest single-day gain in history, after the hardware maker — best known for its personal computer business — released results showing growing demand for its AI servers.

The surge may recall Dell's heyday, when its stock soared more than 200% for three consecutive years in the late 1990s. But after the company lost more than 80% of its value in the wake of the dot-com bubble burst, it was taken private in 2013. Dell returned to the capital markets in late 2018 and is now worth $125 billion more than its peak valuation of $148 billion in March 2000.

The exceptionally strong results demonstrate that Dell is “the latest tech company once seen as an industry dinosaur to rediscover a new reason for existing as an artificial intelligence powerhouse,” said Emmanuel Valavanis of Forte Securities.

Lenovo gained global prominence by acquiring the personal computer division of International Business Machines (IBM) in 2005. The acquisition secured the rights to the iconic ThinkPad line of business notebooks and laid the groundwork for the company to eventually become the world's largest PC manufacturer.

Although the personal computer industry has faced a structural decline for years, Lenovo's bet on artificial intelligence products and services helped the Chinese hardware company register 20% revenue growth last year. Currently, almost 40% of its total sales come from these AI-related businesses.

Lenovo's shares rose 105% in May, reaching an all-time high and recording its best month in over 25 years. This year, its shares are the best performers on the benchmark Hang Seng Index, accumulating a 159% increase and providing investors with a return more than three times that of the second most profitable stock on the index.

Nokia...Nokia Corporation (NYSE:NOK) got off to a strong start in 2026, presenting first-quarter results on April 23 that demonstrated accelerated momentum in artificial intelligence infrastructure and led the Finnish telecommunications equipment manufacturer to significantly raise its full-year growth expectations in its Network Infrastructure business. The company's shares rose 11.87% in pre-market trading to $11.03, reflecting investor enthusiasm for Nokia's positioning in the AI ​​expansion cycle.

The presentation revealed net sales of €4.5 billion, representing 4% year-over-year growth on a constant currency and portfolio basis, while comparable operating margins expanded 200 basis points to 6.2%. Most significantly, Nokia's AI and Cloud segment recorded 49% sales growth and captured €1.0 billion in orders during the quarter, leading management to revise its addressable market assumptions and raise projections in key business segments. Quarterly Performance Highlights...Nokia's Q1 2026 results demonstrated broad operational improvement, with gross margins expanding 320 basis points year-over-year to 45.5%—a reflection of improved product mix and operational discipline. The company generated €0.6 billion in free cash flow during the quarter and maintained a solid net cash position of €3.8 billion after paying €0.2 billion in dividends.

The AI ​​and Cloud segment emerged as the performance highlight, with its 49% growth rate now representing 8% of the company's total sales. Order capture of €1.0 billion from this segment in Q1 alone provided visibility of sustained momentum and catalyzed Nokia's decision to raise its assumptions for the full year.

AI Supercycle Accelerating Addressable Market...Nokia's presentation highlighted a fundamental shift in its market opportunity, driven by what CEO Justin Hotard characterized as an "AI supercycle." The company now projects its total addressable market will expand from €101 billion in 2025 to €126 billion by 2028, representing a compound annual growth rate of 8%.

Nokia suffered two major setbacks in the 2000s: first, the telecommunications boom that eventually turned into a collapse; then, its mobile phone business was deeply affected by the rise of smartphones. From a peak market value of €300 billion (US$349 billion), its shares fell by as much as 98% by 2012.

After selling its mobile phone division to Microsoft in 2014, Nokia reinvented itself by focusing on the less glamorous business of telecommunications network equipment. Its most recent revival was driven by the acquisition of Infinera, an American optical networking specialist, in 2025, just as AI-focused data centers began to increase the demand for faster connections between computing clusters.

Shares of the Finnish company have already surged more than 124% this year, making it the fourth best performer in the STOXX Europe 600 index. Even so, the stock remains about 80% below its all-time high from the dot-com bubble era.

Few companies better symbolize the resurgence of traditional technology stocks than Cisco, the network equipment manufacturer that was one of the biggest symbols of the dot-com bubble and briefly became the most valuable company in the world in 2000.

The company reinvented itself, migrating from traditional networks to artificial intelligence infrastructure. Its success in the AI ​​era was evident in the results released earlier this month, which included a strong revenue forecast for the fourth fiscal quarter and a plan to reduce staff to accelerate its AI-focused transformation.

These results represented further evidence that growth trends are strengthening, reinforcing the acceleration in AI-related demand observed last year. This movement helped the stock return to record levels, finally surpassing the peak reached in March 2000.

Network Infrastructure: Optical Networks Leading Growth...Nokia's Network Infrastructure segment recorded 6% year-over-year sales growth to approximately €1.9 billion, with performance heavily driven by Optical Networks, which surged 20% to €821 million. This strength reflects Nokia's strategic positioning for AI-driven data center interconnection and cloud infrastructure expansion.

While Optical Networks thrived, IP Networks grew a modest 3% to €626 million, and Fixed Networks fell 13% to €383 million as Nokia continues strategic portfolio adjustments in this sub-segment. Overall segment gross margins expanded 150 basis points to 43.4%, although operating margins fell 30 basis points to 6.7% due to investment in growth initiatives.

Nokia's competitive positioning in optical networks received a significant boost with product launches at the OFC conference. The company introduced a new architecture featuring four coherent optical building blocks powering 13 application-optimized solutions, promising customers up to 70% reductions in total cost of ownership.

The new approach replaces Nokia's previous two-engine-per-generation strategy with four specialized DSPs—Ontario, Huron, Superior, and Pacific—each optimized for different distance and capacity requirements ranging from 60 km to 15,000 km transmission distances. This modular architecture allows Nokia to serve diverse customer applications more efficiently, reducing development costs and time to market.

Mobile Infrastructure: AI-RAN momentum gaining traction...Nokia's Mobile Infrastructure segment delivered 3% year-over-year growth to approximately €2.5 billion, with significantly improved profitability metrics. Gross margins expanded substantially by 430 basis points to 48.5%, while operating margins increased by 380 basis points to 8.9%—demonstrating the impact of cost discipline and a favorable product mix.

Nokia's balance sheet remained solid with €3.8 billion in net cash at the end of the quarter, up from €3.4 billion at the end of Q4 2025. The generation of €0.6 billion in free cash flow was primarily driven by working capital seasonality.

The working capital contribution of €530 million was broken down into €220 million from receivables improvements, partially offset by €150 million from inventory accrual, and supported by €460 million from increased liabilities. The company paid out €200 million in dividends while also funding capital expenditures, cash taxes, and restructuring activities.

Looking ahead, Nokia maintained its full-year 2026 comparable operating profit forecast of €2.0 billion to €2.5 billion, with management indicating that current performance is tracking "slightly above the midpoint" of that range.

Specifically for Q2, Nokia expects sequential net sales growth of 5-9% and comparable operating profit representing 12-16% of the full-year total—implying Q2 operating profit in the range of €240-400 million. The company also updated its comparable financial income and expense assumption to a positive €150-250 million for the full year.

Nokia projects a comparable operating profit free cash flow conversion of 55-75% by 2026, with capital expenditures of €900-1 billion and cash tax outflows of approximately €500 million. The comparable income tax rate is expected to be 26-27%.

mundophone