Nokia announced third-quarter earnings above expectations on Thursday as AI and cloud demand lifted data-center networking sales, offsetting weak spending by traditional telecom operators. Nokia also recognized revenue from part of the company's data-center equipment backlog. Quarterly net sales increased 10% year over year to 5.15 billion euros ($5.93 billion). Sales grew 9% at constant currencies. Revenue surpassed the $5.80 billion analyst forecast, while adjusted earnings of 10 cents per share exceeded the 8-cent consensus estimate.
Network Infrastructure revenue increased 15% from a year earlier. IP Networks revenue grew 43% year over year. Optical Networks revenue increased 18% year over year. Mobile Infrastructure sales rose 5% to 2.9 billion euros, above analysts' 2.8 billion euro estimate. Radio Networks and Technology Standards supported the Mobile Infrastructure increase. Some Mobile Infrastructure revenue moved into the third quarter from the fourth quarter.
AI and Cloud revenue grew 126% year over year and represented 12.2% of Nokia's total sales. Nokia received orders worth 1.5 billion euros from AI and cloud customers during the quarter. CEO Justin Hotard is increasing Nokia's data-center networking presence as weak 5G investment depresses traditional telecom spending. Nokia's purchase of Infinera supports that expansion strategy. Nokia expects to finish integrating Infinera by the end of 2026 and achieve approximately 200 million euros in cost savings. Nokia forecasts 25% to 30% growth for the broader Optical and IP Networks businesses in 2027. Nokia and NVIDIA are developing mobile-network equipment that uses advanced chips, extending Nokia's AI efforts into communications networks.
Fast-growing investment in AI infrastructure has reduced the availability of memory chips and other components, raising industry costs. Hotard said on Thursday that customers increasingly recognize potential shortages and are changing purchasing decisions accordingly. Nokia is adding optical-networking capacity, including a second San Jose facility expected to operate fully by the end of October. However, limited semiconductor supplies continue to present difficulties.
Nokia increased its full-year restructuring expense forecast from 800 million euros to as much as 1.1 billion euros. Reported operating profit declined 22% to 196 million euros. Nokia's reported operating margin decreased from 5.4% to 3.8%. However, comparable operating profit increased 35% to 605 million euros. The comparable operating margin gained 220 basis points to reach 11.7%. Nokia faces the challenge of balancing rising AI demand against restructuring expenses, component shortages and subdued telecom investment.
Nokia retained its 2026 comparable operating profit guidance of 2.1 billion euros to 2.6 billion euros. Nokia forecasts Network Infrastructure sales growth of 12% to 14%, measured at constant currencies and on a constant portfolio basis. Nokia increased its Optical and IP Networks growth assumption to slightly above the previous forecast of 18% to 20%. Nokia expects fourth-quarter revenue to rise 20% to 24% from the preceding quarter, implying approximately $7.12 billion to $7.36 billion in sales. Analysts forecast fourth-quarter revenue of $7.30 billion. Nokia expects fourth-quarter comparable operating profit to increase strongly from the preceding quarter, taking the full-year result above the guidance range's midpoint. However, Nokia cut its full-year free cash flow conversion forecast to 35% to 55% because of increased working capital investment and faster restructuring spending.
Benzinga Pro data showed Nokia shares down 5.73% at $8.72 during premarket trading on Thursday. Investors weighed lower reported operating profit, increased restructuring expenses and the reduced free cash flow conversion forecast.
Nokia AI Business Surpasses 126% Growth Amid Data Center Demand Surge
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Summary
Nokia’s AI business surged 126% year-over-year in Q3 2026, fueled by rising data-center demand. Net sales hit 5.15 billion euros, up 10%, with AI and cloud revenue making up 12.2%. The segment secured 1.5 billion euros in orders. Nokia is expanding optical-networking capacity with a new San Jose site and integrating Infinera. On-chain data shows growing interest in AI infrastructure, while inflation data remains stable, supporting tech investment.
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