The AI Networking Boom: Why Nokia, Cisco, and Arista Are Surging

The biggest headline was Cisco’s outlook for AI infrastructure demand. After receiving $5.3 billion in AI‑related orders year‑to‑date, the company raised its FY2026 AI infrastructure order forecast to roughly $9 billion, almost double earlier expectations.

This jump suggests hyperscalers—companies such as Amazon, Microsoft, and Google—are rapidly expanding the networks that connect thousands of GPUs inside AI data centers.

Why AI data centers require massive networking upgrades

Large‑scale AI clusters rely on extremely fast connections between servers, storage systems, and accelerators. As AI models grow larger, the amount of data moving between machines increases dramatically.

That means hyperscalers must invest heavily in:

• high‑speed Ethernet switching
• optical interconnects between data centers
• data‑center routing and transport networks
• specialized interconnect infrastructure for AI clusters

Cisco’s order growth shows that this network layer has become a major bottleneck—and opportunity—in the AI buildout. When hyperscalers expand compute capacity, they must simultaneously upgrade the networks that link thousands of GPUs together.

Why Nokia’s stock hit a 16‑year high

Nokia’s rally reflects the same infrastructure trend.

The company reported strong first‑quarter 2026 results, including a 54% jump in comparable operating profit to €281 million, beating analyst expectations.

More importantly, its results showed accelerating demand from AI‑related customers:

• Sales to AI and cloud customers grew 49% year over year.
• Nokia booked €1 billion in new orders from AI and cloud customers in the quarter.
• Optical networking—critical for connecting AI data centers—was a major growth driver.

These figures helped push Nokia’s shares to their highest level since 2010.

Strategic positioning for the AI infrastructure cycle

Several strategic moves have positioned Nokia to benefit from this shift toward AI networking.

1. Expansion in optical networking
Nokia completed its $2.3 billion acquisition of optical networking firm Infinera, strengthening its ability to supply high‑capacity fiber and data‑center interconnect technologies used in AI clusters.

2. Collaboration with Nvidia on AI‑native networks
Nokia and Nvidia announced a partnership to develop AI‑RAN and next‑generation AI‑native telecommunications infrastructure, highlighting the growing convergence between telecom networks and AI computing systems.

Together, these moves help reposition Nokia from a traditional telecom vendor into a supplier of AI‑era data‑center and cloud networking infrastructure.

The hyperscaler capex opportunity

The market reaction to Cisco and Nokia underscores a broader investment theme: hyperscaler capital spending is cascading into networking vendors.

When cloud providers build AI data centers, they must deploy multiple layers of infrastructure:

1. GPUs and accelerators
2. AI servers
3. power and cooling systems
4. high‑speed networking and optical interconnects

For years, most investor attention focused on chips—especially GPUs. But Cisco’s order growth and Nokia’s earnings suggest the networking layer is becoming one of the largest beneficiaries of the AI buildout.

Ripple effects across networking stocks

The trend extends beyond Cisco and Nokia.

Companies such as Arista Networks are also positioned to benefit because they specialize in high‑performance Ethernet switching used in hyperscale data centers. Analysts increasingly view these firms as key infrastructure providers for AI clusters and cloud expansion.

Even Cisco itself is increasingly seen not just as a traditional enterprise networking company but as a core AI infrastructure supplier, particularly in data‑center networking and optical connectivity.

The bigger takeaway: AI is becoming an infrastructure supercycle

The rally in networking stocks suggests investors now view the AI boom as a full‑stack infrastructure cycle, not just a semiconductor story.

Evidence from recent earnings points to a consistent pattern:

• hyperscalers are rapidly scaling AI data centers
• networking orders are accelerating alongside GPU deployments
• infrastructure vendors are seeing tangible revenue and profit growth

Nokia’s 16‑year stock high, combined with Cisco’s record earnings and rising AI order forecasts, indicates that the next phase of the AI boom will increasingly revolve around the networks that connect massive AI computing clusters together.

As AI systems scale toward tens of thousands—or even millions—of interconnected processors, the companies that build those networks may become some of the most important suppliers in the entire AI ecosystem.