Nokia's sales to AI and cloud customers more than double as IP networks grow 43%

Nokia said sales to customers building artificial intelligence and cloud infrastructure more than doubled in the third quarter, driven by demand for its optical and IP networking equipment, according to its interim report filed on October 22.

What happened

Group net sales were EUR 5.154 billion, compared with EUR 4.700 billion a year earlier, an increase of 10% as reported and 9% at constant currency. Network Infrastructure net sales were EUR 2.158 billion, up 17% as reported and 15% at constant currency, "led by IP Networks growing 43% and Optical Networks 18%." Nokia said "Group net sales to AI & Cloud customers grew 123% and order intake 118%."

President and Chief Executive Justin Hotard said Nokia "secured EUR 1.5 billion in new orders" in AI and cloud and expects "our combined Optical and IP Networks businesses to grow between 25% and 30% in 2027." Nokia also pointed to its partnership with Google in support of the company's EUR 13 billion investment in Finland.

Profit

Comparable operating profit rose 35% to EUR 605 million, and the comparable operating margin rose 220 basis points to 11.7% from 9.5%. Comparable gross margin was 44.6%, down 20 basis points. On a reported basis, operating profit fell 22% to EUR 196 million and the operating margin fell to 3.8% from 5.4%, which Nokia attributed to "accelerated restructuring and integration cost." Comparable diluted earnings per share from continuing operations were EUR 0.09, compared with EUR 0.06; reported EPS was EUR 0.03.

Mobile Infrastructure net sales grew 5%, which Nokia said was partly due to revenue shifting from the fourth quarter into the third.

Outlook

Nokia's full-year outlook is unchanged: comparable operating profit of EUR 2.1 billion to EUR 2.6 billion. It assumes a 20% to 24% quarter-on-quarter increase in net sales in the fourth quarter and full-year operating profit above the midpoint of the range. It now assumes that Network Infrastructure net sales will grow 12% to 14% in 2026, with optical and IP networks combined growing "somewhat above" its earlier 18% to 20% assumption.

The company said it is on track to complete the integration of Infinera by the end of 2026, one year ahead of plan, with EUR 200 million of net synergies. It also said that, together with T-Mobile and NVIDIA, it completed the first AI-RAN call in a live operator network.