Nokia delivered robust second-quarter results that significantly outperformed analyst expectations, driven by strong demand from artificial intelligence and cloud customers. According to reports from Reuters, the company posted a comparable operating profit of 434 million euros for the quarter ended June, representing an 18% year-on-year increase and comfortably surpassing analysts' average estimate of 382 million euros. The strong performance was fueled by robust demand from AI and cloud infrastructure investments, helping offset broader challenges in the telecom equipment market. However, the company faced headwinds from sudden increases in memory chip prices due to AI companies cornering the market, which impacted telecom equipment makers across the industry. CEO Justin Hotard, who joined Nokia last year after leading Intel's Data Center & AI Group, has focused on expanding the Finnish group's data centre business, including securing a billion-dollar deal with chipmaker Nvidia.
Nokia's strategic expansion beyond traditional telecom infrastructure has proven highly successful, with the company supplying fibre-optic networking equipment to major technology companies building AI data centres. As reported by Reuters, sales to AI and cloud customers doubled during the quarter to 446 million euros, while the company secured 2.8 billion euros in new orders from this high-growth segment. CEO Justin Hotard noted that "demand remains strong, while supply continues to be the main industry constraint, prompting our customers to place longer-term orders." This sustained demand reflects continued investments by hyperscale cloud providers and enterprise customers in AI infrastructure solutions, with the strong revenue performance highlighting the growing importance of high-capacity networking solutions. The Espoo, Finland-based group's performance contrasted with concerns across the sector after Swedish rival Ericsson warned about soaring memory chip costs linked to AI demand potentially pressuring profit margins.
The company's financial performance was further strengthened by strong top-line growth, with comparable net sales reaching 4.82 billion euros during the quarter, according to Reuters. This revenue figure exceeded market expectations and reflected continued investments by cloud providers and enterprise customers despite a mixed spending environment in the broader telecom sector. The Espoo, Finland-based group's performance contrasted with concerns across the sector after Swedish rival Ericsson warned about soaring memory chip costs linked to AI demand potentially pressuring profit margins.
Beyond AI infrastructure, Nokia's traditional optical networking business demonstrated strong momentum with optical networks growing 20% during the quarter, as reported by Investing.com. The company's Network Infrastructure revenue grew 12% on a constant currency basis, indicating robust demand for high-speed fiber systems that move data across and between large facilities. This growth in optical networks, combined with the AI infrastructure expansion, positions Nokia as a key beneficiary of hyperscale data center construction and AI training cluster requirements.
Reflecting confidence in sustained AI and cloud infrastructure demand, Nokia raised its full-year comparable operating profit guidance to a range of 2.1 billion euros to 2.6 billion euros, up from its previous forecast of 2.0 billion euros to 2.5 billion euros, according to Reuters. This upgraded outlook contrasts with concerns across the sector after Swedish rival Ericsson warned about soaring memory chip costs linked to AI demand potentially pressuring profit margins. Nokia's improved forecast suggests the company expects continued momentum from AI and cloud infrastructure investments to support earnings growth through the remainder of 2026, despite industry-wide supply constraints affecting the broader telecom equipment sector.
