AI and cloud business sales doubled! Nokia’s Q2 profit far exceeded expectations, raising full-year earnings guidance.

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Benefiting from the ongoing surge of investment in AI infrastructure, Nokia delivered a better-than-expected second quarter report. Its AI and cloud businesses saw rapid growth, and the company simultaneously raised its full-year profit guidance, forming a sharp contrast with the cautious signals recently released by competitor Ericsson.

Data shows that Nokia's comparable operating profit for the second quarter of 2026 grew 18% year-on-year to 434 million euros, surpassing LSEG analysts' expectations of 382 million euros. Meanwhile, the company's AI and cloud business sales doubled year-on-year to 446 million euros, with new orders reaching 2.8 billion euros—single-quarter order volume has already surpassed the total for all of 2025.

Driven by these results, Nokia raised its full-year comparable operating profit guidance from 2.0-2.5 billion euros to 2.1-2.6 billion euros. This upward adjustment has attracted significant market attention. Previously, Ericsson lowered its profit margin expectations due to rising memory chip costs, dragging down its share price, while Nokia, thanks to strong AI-related business performance, sent a more positive signal for the telecom equipment industry.

AI and Cloud Business as Primary Growth Engine

AI infrastructure is becoming Nokia's most important growth source.

In the second quarter, the company's network infrastructure business achieved double-digit growth, mainly driven by strong demand from AI data centers for fiber optic networks and IP network equipment. AI and cloud business sales doubled to 446 million euros, while new orders hit 2.8 billion euros, providing higher certainty for revenue growth over the coming quarters.

Nokia CEO Justin Hotard said, demand remains very strong, while supply capacity is still the industry's biggest bottleneck, which also motivates customers to lock in longer-term orders ahead of time.

Hotard, who previously led Intel's data center and AI business, has continued to push the company toward AI infrastructure and the data center market since becoming Nokia's CEO last year, and facilitated a cooperation agreement with NVIDIA worth more than $1 billion.

Overall Performance Exceeds Expectations

Overall, Nokia's second-quarter performance was better than market expectations.

The company's comparable net sales reached 4.82 billion euros, up 9% year-on-year at constant exchange rates, also higher than expected. Both network infrastructure and mobile infrastructure businesses achieved growth, with mobile infrastructure maintaining steady profitability.

However, as the company accelerates its restructuring plans, reported profit remains dragged down by one-time restructuring costs. Nokia continues to optimize its organizational structure, allocating more resources to high-growth areas such as AI infrastructure.

Additionally, the company’s upward revision of full-year profit guidance is also partially due to financial adjustments after two business segments were reclassified as "discontinued operations."

AI Boom Drives Demand, Supply Chain Still Challenging

Despite explosive demand for AI infrastructure, supply chain pressures have not been significantly alleviated.

As AI companies continue to expand data centers and centrally procure memory chips, relevant chip prices are rising rapidly, causing cost pressures for telecom equipment manufacturers. Ericsson issued a profit margin warning about this last week, while Nokia says demand remains strong and supply is still the main factor limiting industry growth.

Looking ahead, Nokia plans to further expand its fiber-optic manufacturing capacity and enlarge semiconductor-related production facilities to proactively meet AI infrastructure demand expected to keep growing after 2027. 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 supply chains can keep pace with rapidly growing order volumes.

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