Nokia said today that US chipmaker Nvidia will invest $1 billion for a 2.9% stake in the telecom equipment maker to target the AI communications market, propelling its shares to their highest level in nearly a decade.
The companies will collaborate on artificial intelligence networking solutions and explore opportunities to include Nokia's data centre communications products in Nvidia's future AI infrastructure plans, Nokia said.
Nokia's shares closed up 20.86% following the announcement, a high last touched in late January 2016.
"This is a strong endorsement of Nokia's capabilities," PP Foresight analyst Paolo Pescatore told Reuters. "Next-generation networks, such as 6G, will play a significant role in enabling new AI-powered experiences."
Since joining Nokia earlier this year, new CEO Justin Hotard, who earlier led Intel's INTC.O data centres and AI group, has focused on growing the Finnish firm's data centre business, betting on AI growth.
Last week, Nokia's third-quarter profit beat market expectations, helped by sales to AI-driven data centres following its acquisition of U.S. optical networking firm Infinera.
Nokia said it will issue 166,389,351 new shares for Nvidia, which the US company will subscribe to for $6.01 per share.
