Nokia CEO Justin Hotard Predicts Long-Term AI Supercycle Despite Market Bubble Concerns

Nokia's strategic pivot toward artificial intelligence represents its most significant transformation since divesting its mobile phone division in 2013.

Justin Hotard, Nokia's Chief Executive Officer, has characterized artificial intelligence as driving a sustainable growth trajectory comparable to the internet revolution of the 1990s, while dismissing concerns about a potential market bubble.

Hotard's observations emerge amid intensifying discussion regarding the sustainability of the current surge in AI investments.

"I fundamentally think we're at the front end of an AI supercycle, much like the 1990s with the internet," Hotard explained during his conversation with Reuters. "Even if there's a bubble, a trough, we'll look to the longer-term trends. And right now, all those trends are very favourable."

A recent Bank of America survey revealed that over half of fund managers believe AI stocks have entered bubble territory.

Amazon's founder Jeff Bezos and OpenAI's CEO Sam Altman have similarly warned that investor enthusiasm might result in significant financial losses.

Nevertheless, demand for data center infrastructure continues to accelerate dramatically as companies compete to build the foundational systems necessary to support artificial intelligence technologies.

Hotard, who previously headed Intel's data centers and AI division before joining Nokia in April, noted that the company is witnessing this growth "across the board," spanning from major technology corporations to smaller entities expanding their presence in Europe.

"Clearly, the incremental growth investment is driven by data centres," he stated. "It's a huge step up in volume."

Earlier on Thursday, the Finnish telecommunications equipment manufacturer announced quarterly earnings that exceeded market expectations, bolstered by robust optical and cloud demand, including sales to AI-powered data centers following its acquisition of U.S. optical networking company Infinera.

Nokia's AI initiative marks its most substantial strategic shift since selling its mobile phone business in 2013.

While telecommunications networks remain its primary business segment, the company is integrating AI capabilities into various domains including radio access and fiber networks.

Last year, Nokia acquired Infinera, one of the leading vendors for intra-data center communications technology.

In September, Nokia established a dedicated Technology and AI organization led by newly-appointed Chief Technology Officer Pallavi Mahajan, a former Intel executive, to accelerate its artificial intelligence development initiatives.