Nokia Corporation (NOK)

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That third quarter, Pekka Lundmark, Nokia’s new CEO, said the company “will invest whatever it takes to win in 5G.” And to do so, the company would step up its research and development (R&D) spending.

That scared some analysts into thinking profitability would take a hit as R&D spending increased.

But as we can see, by improving margins, that worry was unfounded.

And Nokia’s R&D efforts are already paying off. Its AI-enabled chip, ReefShark, already exceeded management’s expectations. 5G sales powered by ReefShark were 43%, eight percentage points higher than anticipated.

ReefShark is Nokia’s most recent semiconductor that powers its 5G base stations. The ReefShark chipset is smaller, decreasing the antenna size by half, which makes these base stations less bulky and obtrusive. It helps enable a 50–60% reduction in energy use compared to previous chips. This lowers the total cost of ownership for wireless providers… a great selling point.

Nokia remains a strong buy at these levels.

Nokia (NOK) is a strong buy under $5.50 a share.