Nokia Oyj’s stock surged 5.08% over the past 24 hours, driven by the company’s strategic move into the AI optical chip supply chain and an improved credit outlook from S&P.

The rally was fueled by Nokia’s recent announcement that it will acquire NXP Semiconductors' wafer fabrication facility in Arizona, with plans to convert it into an indium phosphide optical chip production line. Indium phosphide is a critical material for optical interconnects in AI data centers, and the current supply-demand gap is reportedly larger than that of DRAM and NAND. This positions Nokia at a key node in the AI optical chip supply chain, following similar investments by NVIDIA in Lumentum and Coherent to secure long-term supply.

Additionally, S&P recently upgraded Nokia’s outlook to “positive” while affirming its “BBB-” credit rating, citing business diversification and stable cash flow. The positive sentiment in the communication equipment sector also lifted peers, with Lumentum, Applied Optoelectronics, and others posting gains.