Pekka Lundmark is replaced as CEO of Nokia by Justin Hotard

With the appointment of Justin Hotard as CEO, Nokia is indicating a strategy change away from 5G and toward AI and data center-driven development.

According to Nokia, Pekka Lundmark will leave his position as CEO on April 1 and Justin Hotard will take over.

On Intel’s website, Hotard is listed as the executive vice president and general manager of the company’s Data Center & AI Group.

The shift in leadership occurs as telecom equipment manufacturers, like Nokia, attempt to diversify into high-growth fields like artificial intelligence in response to diminishing sales of 5G technology.

“His extensive knowledge of the data center and artificial intelligence markets, as well as his proven ability to accelerate the growth of technology companies, are crucial for Nokia’s future expansion,” said Nokia Chair Sari Baldauf in a statement.

Nokia’s stock increased 1.6% to €4.7 by 08:54 GMT after the news, surpassing the 0.45% increase in the Helsinki stock exchange as a whole.

Analysts at JPMorgan noted that Lundmark had been successful in stabilizing the business and called the CEO change “unexpected.”

It appears that this change was planned for a while because a new CEO has already been chosen. Nokia stated in a note that it is evident which areas the company want to concentrate on given the incoming CEO’s experience with data centers and artificial intelligence.

Inderes analysts concurred, viewing the leadership move as a strategy shift towards Nokia’s Network Infrastructure division, where data centers and artificial intelligence investments are creating new growth prospects.

Lundmark, who became CEO of Nokia in 2020, will continue to advise Hotard through the year’s end.

When Lundmark stated that he intended to leave leadership positions once Nokia’s repositioning initiatives were more advanced, the business disclosed that succession planning had begun.

“When Pekka told the Board that he would like to think about leaving executive positions when the business’s repositioning was further along and the right successor had been found, the planning for this leadership transition was started,” Baldauf stated.

Nokia’s larger initiatives to profit from AI-driven infrastructure development are in line with the change in leadership.

In order to take advantage of the rising expenditures in artificial intelligence-powered data centers, the business revealed last year that it had agreed to pay $2.3 billion to purchase the US optical networking equipment manufacturer [Infinera].

Nokia’s stock is still down over 90% from its peak in June 2000, despite a 27.85% rise in the last year.