Driven by continued strong investment in AI infrastructure, Nokia Oyj delivered a second-quarter performance that exceeded expectations. AI and cloud business sales saw rapid growth, prompting the company to raise its full-year profit guidance. This stands in stark contrast to the cautious signals recently released by competitor Ericsson.
Data shows that Nokia's comparable operating profit for the second quarter of 2026 increased by 18% year-on-year to 434 million euros, surpassing the 382 million euro estimate from LSEG analysts. During the same period, the company's AI and cloud business sales doubled year-on-year to 446 million euros, with new orders reaching 2.8 billion euros. The order volume for a single quarter has already exceeded the full-year level of 2025.
Buoyed by this performance, Nokia raised its full-year comparable operating profit guidance from a range of 2.0 to 2.5 billion euros to a new range of 2.1 to 2.6 billion euros. This upward revision has garnered significant market attention. This move contrasts with Ericsson, which recently lowered its margin forecast due to rising memory chip costs, dragging down its share price. Nokia's strong AI-related business performance sends a more positive signal for the telecom equipment industry.
AI and Cloud Business Becomes the Main Growth Engine
AI infrastructure is becoming the most important growth source for Nokia.
In the second quarter, the company's network infrastructure business achieved double-digit growth, primarily driven by strong demand from AI data centers for optical network and IP network equipment. AI and cloud business sales doubled to 446 million euros, while new orders reached 2.8 billion euros, providing high visibility for revenue growth in the coming quarters.
Nokia CEO Justin Hotard stated that demand remains very strong, and supply capacity remains the biggest bottleneck for the industry, prompting customers to lock in longer-term orders in advance. Hotard, who previously led Intel's data center and AI business, has been driving the company's transformation towards AI infrastructure and data center markets since becoming CEO last year. This has also led to a cooperation agreement with Nvidia valued at over 1 billion euros.
Overall Performance Exceeds Expectations Across the Board
Overall, Nokia's operating performance in the second quarter comprehensively surpassed market expectations.
The company's comparable net sales reached 4.82 billion euros, a 9% increase year-on-year at constant exchange rates, also exceeding market forecasts. Both the network infrastructure and mobile infrastructure businesses achieved growth, with the mobile infrastructure business continuing to maintain stable profitability.
However, as the company accelerates its restructuring plan, reported profits were still impacted by one-time restructuring costs. Nokia is continuously optimizing its organizational structure, further shifting resources towards high-growth areas like AI infrastructure.
Additionally, the company's decision to raise its full-year profit guidance was partly influenced by the financial reporting adjustments following the reclassification of two businesses as "discontinued operations."
AI Boom Boosts Demand, Supply Chain Remains a Challenge
Despite the continued explosion in AI infrastructure demand, supply chain pressures have not significantly eased.
As AI companies continue to expand data centers and centrally procure memory chips, chip prices are rising rapidly, putting general cost pressure on telecom equipment manufacturers. Ericsson issued a profit margin warning on this issue last week, while Nokia stated that demand remains strong and supply is still the main factor limiting industry growth.
Looking ahead, Nokia plans to continue expanding its optical fiber manufacturing capacity and build additional semiconductor-related production facilities. This is to prepare for the expected sustained release of AI infrastructure demand from 2027 onwards. As the company accelerates its transformation into a supplier for AI data center networks, the market's focus will shift from whether demand exists to whether the supply chain can keep pace with the rapidly growing order book.
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