Nokia's stock is getting a big Nvidia bump. Why the chip maker is taking a stake.

By Emily Bary

Networking is increasingly important in the AI race as companies look to move data more quickly

Nokia and Nvidia plan to collaborate in networking.

The technology world is becoming even more interconnected - this time as Nvidia Corp. plans to take a billion-dollar stake in Nokia Corp.

The equity investment comes with a new strategic partnership between the chip maker and the Finnish maker of networking infrastructure - moves that the companies say could generate "significant value" for both players.

Nokia (FI:NOKIA) intends to use the funds from Nvidia's (NVDA) investment "to advance trusted connectivity for the AI supercycle," among other corporate initiatives, according to the company's release. Nokia will also jump-start development of its 5G and 6G RAN software to run on Nvidia's architecture.

The two businesses will collaborate on networking technology and "explore opportunities to incorporate Nokia's data-center switching and optical technologies in Nvidia's future AI infrastructure architecture."

In its own release, Nvidia said the collaboration would drive "massive improvements in performance and efficiency, helping ensure that consumers using generative, agentic and physical AI applications on their devices will have seamless network experiences."

Nokia's stock was up 28% shortly after the announcement, while Nvidia's was up 2%. Nvidia Chief Executive Jensen Huang is in the midst of speaking at the company's Washington, D.C., extension of its GTC event.

See more: Nvidia's stock rises as Jensen Huang heads to D.C. Here's what's at stake.

The investment validates the importance of networking and optical connectivity in the artificial-intelligence race - and its importance to Nvidia's business.

Earlier this week, Mizuho desk-based analyst Jordan Klein highlighted the growing need for connectivity solutions as AI players, such Nvidia, look to move data more quickly in and out of chip clusters.

"Telecommunications is a critical national infrastructure - the digital nervous system of our economy and security," Huang added in a Tuesday release. Nokia will be adding Nvidia AI-RAN connectivity products to its portfolio, a development that Huang said "empowers the United States to regain global leadership in this vital infrastructure technology."

Meanwhile, Nvidia saw strength in its networking business last quarter, with Huang playing up the importance of the unit on the earnings call.

"Networking obviously is very important in AI factories," he said, according to a transcript provided by AlphaSense. "In fact, choosing the right networking, the performance, the throughput improvement going from 65% to 85% or 90%, that kind of step up because of your networking capability effectively makes networking free."

The partnership between Nvidia and Nokia is the latest example of interlinking in the tech sector. Intel recently took a stake in Intel Corp. while announcing a partnership with the company, and it has invested in OpenAI. And OpenAI has taken a stake in Advanced Micro Devices Inc. (AMD).

See more: Intel's stock is soaring. Here's why Nvidia is investing $5 billion in the chip maker.

-Emily Bary

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10-28-25 1329ET