Nokia (NOK 0.51%) stock is bounding higher in Monday's trading. The tech company's share price was up 9.1% as of 2:15 p.m. ET and had been up as much as 10.8% earlier in the session.

Nokia's valuation is seeing strong gains today in conjunction with bullish analyst coverage from Bank of America and a strong demand outlook for the company's optical technologies for artificial intelligence (AI). The stock is now up roughly 60% year to date.

Bank of America thinks Nokia can keep soaring

Before the market opened this morning, Bank of America published new coverage on Nokia. The firm's analysts raised their rating on the stock from neutral to buy and set a one-year price target of $12.40 per share. Even with today's gains, the price target still suggests additional potential upside of roughly 20% as of this writing.

Bank of America's analysts pointed to the integration of Nokia's Infinera acquisition as a core component of its bullish thesis on the stock. Thanks to the addition of Infinera's advanced optical technologies, the investment firm thinks that Nokia is in gooa d position to benefit from growing demand for next-generation network technologies used to support AI workloads.

Is Nokia poised to be a big AI winner?

Nokia received a surge of new attention as an AI investment play after the company announced that it had entered into a partnership with Nvidia earlier this year. Oliver Wong, Bank of America's lead analyst on Nokia stock, sees the company's optical networks segment increasing its revenue at a 17% compound annual growth rate through 2028. With the company generating more of its overall revenue from high-margin services to cloud hyperscaler customers, the business could see strong margin improvements in addition to robust sales growth.