Nokia shares jump 20% after Nvidia announces $1 bn investment

US chip giant Nvidia will take a 2.9 per cent stake in Finnish telecoms equipment maker Nokia for $1 billion, Nokia said Tuesday, sending its share price soaring almost 20 per cent.

The investment is in addition to a strategic partnership between the two companies to develop Nokia's fifth and sixth generations (5G and 6G) of mobile telephony using Nvidia chips.

"Nokia and Nvidia have agreed to collaborate on AI networking solutions and explore opportunities to incorporate Nokia's data centre switching and optical technologies in Nvidia's future AI infrastructure architecture," Nokia said in a statement.

It said it would issue more than 166 million new shares, for which Nvidia would pay $6.01 per share. 

Under the partnership, Nokia "intends to increase its presence in the AI and cloud market with data centre-aligned networking solutions."

The Nokia share was trading up by more than 19 per cent after the news, at 7.53 euros.

Virtually unknown to the general public just three years ago, Nvidia now boasts the world's highest revenues, driven by sales of its graphics cards -- or GPUs (graphics processing units) -- the processors that are key to building the technology behind ChatGPT and its rivals.