Nokia Gains Big with CoreWeave’s AI Networking Deal

Nokia today announced that it has been selected by AI-focused cloud provider CoreWeave for optical and IP transport networking in its global backbone.

This is a big win for Nokia in the red-hot AI networking space, where it likely beat out major competitors including Arista Networks, Cisco, and Juniper Networks, according to Wall Street analysts. Nokia said one of the keys to victory was providing high performance at scale while “driving 30% more traffic within the same energy envelope.” Energy usage is one of the highest cost components of cloud networking.

Jim Julson, Director of Networking at CoreWeave, stated in the Nokia release:

“CoreWeave has chosen Nokia hardware to power its backbone and edge platforms to meet the performance, stability and scalability demands that today's and tomorrow’s AI and ML hyperscale clouds require. With the explosion of demand centered around the infrastructure required to meet these demands, Nokia has proven to be a critical partner and we have no doubt that as CoreWeave continues to scale, Nokia will be there to help facilitate a world-class cloud experience for all our customers.”

CoreWeave Is an AI Cloud Leader

The deal is important not only for the money, but because it gives Nokia credibility in the AI networking market. CoreWeave has focused on networking AI workloads driven by GPUs. It is well funded, with $12 billion in equity and debt financing. It has targeted a range of use cases for machine learning and AI, including graphics and rendering, life sciences, real-time streaming, and more.

Meanwhile, Nokia, which has been beset by a decade of reorgs, has been flying a bit under the radar with its strong routing portfolio, which likely tipped the deal in its favor when combined with its optical solutions. Nokia said its high-performance FP5 IP routing silicon was part of the deal, providing programmability and customization in the backbone.

According to the announcement, the CoreWeave backbone is being built with the FP5-based Nokia 7750 Service Router (SR), which provides 800-Gbit/s speeds, Ethernet VPN (EVPN) support, and Nokia’s Service Router Operating System (SROS). The Nokia 1830 Photonic Service Interconnect (PSI) solution will support optical transport and datacenter interconnection. The Nokia Network Services Platform (NSP) will automate network functions and optimize resource allocation.

New Momentum for Nokia

The win gives Nokia significant momentum because it shows that its routing and optical portfolio can compete with the largest players in the market in the networks being built for AI infrastructure—the fastest-growing networks in the world. At the same time, Nokia has also announced strategic deals with AI chip leader NVIDIA in the 5G space.

Wall Street was emboldened by the news, lifting Nokia’s shares about 1% to $4.23. Nokia shares are up 24% year-to-date.

Simon Leopold, an analyst with Raymond James, wrote in a note that the deal points to Nokia’s resurgence as a player in webscale and hyperscale networking, with further wins possible:

“The win further reinforces our belief that Nokia can double its Web Scale sales organically from 2% currently to 4% via switching wins, while the Infinera merger will increase this further (~6%). We see webscale wins driving improved profitability and improving diversity, in addition to helping the topline (over $1B in sales and percent of revenue will be close to Cisco).”

This could present a lot of upside. As Leopold points out in his note, Nokia shares a portion of a DCI routing award at Google with competitors Cisco, Arista, and Juniper, but it has little routing presence with other webscalers. “Juniper and Cisco lead in hyperscale routing, and Arista has gained traction in this use case with its lead in the switching use cases,” wrote Leopold.

CoreWeave recently announced that it anticipates doubling its datacenter footprint to 28 datacenters globally by the end of 2024. Leopold points out that if the company doubles its capex in the next year to $4 billion to $6 billion, the opportunity could be even greater for Nokia.