Nokia shares surged nearly 21% on Tuesday, reaching their highest level in almost ten years, after Nvidia announced a $1 billion investment in the Finnish telecoms giant as part of a sweeping collaboration on artificial intelligence and data centers.

The rally followed confirmation that Nvidia would take a 2.9% stake in Nokia, making it the company’s second-largest shareholder. The partnership will see the two firms jointly develop AI-powered networking solutions and integrate Nokia’s data center communications products into Nvidia’s expanding AI infrastructure.

The announcement comes as global spending on data centers accelerates, with McKinsey estimating capital investment could exceed $1.7 trillion by 2030, largely driven by AI adoption. Nvidia already holds a near-monopoly in the supply of chips for AI data centers and is now moving deeper into telecom, a sector increasingly shaped by intelligent networking and automation.

For Nokia, the deal marks a strong vote of confidence in its transformation strategy under new CEO Justin Hotard, who took over earlier this year after leading Intel’s data center and AI division. Hotard said he expects the partnership to begin contributing to revenue from 2027, as the new technologies are rolled out for 5G and later 6G.

“This is a strong endorsement of Nokia’s capabilities,” said analyst Paolo Pescatore of PP Foresight. “Next-generation networks such as 6G will play a major role in enabling new AI-driven experiences.”

Nvidia CEO Jensen Huang described the partnership as a defining moment for the convergence of computing and communications. “Thank you for helping the United States bring telecommunication technology back to America,” he said, praising Nokia’s technology and innovation pace.

The two companies also plan to work with T-Mobile US to develop AI radio technologies for future 6G applications, with trials set to begin next year.

Nokia’s stock closed the day up 20.86%, its highest level since early 2016 — a sharp turnaround for the firm, which has spent much of the past decade restructuring amid intense competition from Ericsson and Huawei.