The CEO of Nokia points to the growth potential of AI investments.

Nokia CEO Justin Hotard stated that artificial intelligence strengthens long-term growth trends and compared this situation to the internet boom of the 1990s. Hotard expressed an optimistic outlook on capital allocation, downplaying concerns about whether the increase in AI investments is sustainable.

In an interview with Reuters, Hotard shared his thoughts, saying, "Essentially, we are at the beginning of the AI supercycle, which bears a lot of resemblance to the internet." However, he acknowledged increasing concerns about whether there is a bubble in the AI sector while asserting that long-term trends remain positive.

A recent Bank of America survey revealed that more than half of fund managers believe AI stocks are in a bubble. Amazon founder Jeff Bezos and OpenAI CEO Sam Altman have warned that investors' excitement could lead to significant losses.

Nevertheless, there is a rapid increase in demand for data centers due to companies' efforts to build the necessary infrastructure for storing AI-driven data. Hotard noted that after managing Nokia's data center and AI group, this growth has occurred across a broad spectrum, ranging from large tech firms to smaller players.

Hotard stated, "Clearly, increased growth investment is driven by data centers. This is a significant volume increase." On Thursday, Nokia reported quarterly earnings that surpassed market expectations, boosted by strong optical and cloud demand, along with an increase in sales related to AI-supported data centers.

Nokia's foray into the AI space represents the largest transformation since it sold its mobile phone unit in 2013. While mobile networks remain its core business, the company is integrating AI into areas such as radio access and fiber networks. Last year, it acquired Infinera, one of the largest suppliers in intra-data center communication. In September, it established a dedicated organization led by newly appointed Technology and AI Division General Manager Pallavi Mahajan to accelerate its AI efforts since its inception.