Nokia has gained strong momentum from the global AI infrastructure race. The company reported sharp growth in optical and IP networking demand. Cloud providers and data center operators drove most of that expansion.
The Finnish vendor booked about €1.5 billion in new orders from AI and cloud customers. Sales to that segment more than doubled year over year. Overall third-quarter revenue rose 10%, reaching about €5.15 billion.
However, the headline growth tells a narrower story. Without AI and cloud demand, revenue would have grown only 2%. That shows how important one fast-moving market has become for Nokia.
Chief Executive Justin Hotard sounded confident during the company’s quarterly briefing. He raised growth expectations for the combined optical and IP units next year. Nokia now expects 25% to 30% growth, above its earlier forecast.
“We’re not seeing any slowdown in connectivity demand – I think quite the converse,” said Hotard earlier today in response to a Light Reading question. “We’re seeing the investment increase and accelerate around connectivity.”
The company’s 2025 acquisition of Infinera now looks increasingly valuable. Infinera strengthened Nokia’s optical portfolio at the right time. Data centers need faster links between campuses, regions, and computing clusters.
Even so, rapid demand brings operational pressure. Nokia must expand production while chip supply remains tight. It is adding capacity at optical facilities in San Jose and Pennsylvania.
Supply risks remain outside Nokia’s direct control. TSMC still produces many of the world’s most advanced chips. Hotard expects supply pressure to last into 2028. Memory factory capacity may not improve meaningfully until 2029.
Meanwhile, Nokia’s network infrastructure unit performed well overall. Third-quarter sales rose 15% to about €2.16 billion. Yet fixed network product sales fell 22%, mainly in broadband equipment.
Nokia appears to be shifting away from lower-margin areas. It is focusing more on optical line terminals. These systems sit at the operator end of fiber networks.
Mobile infrastructure also delivered better numbers. Revenue rose 5% to about €2.9 billion. The radio business helped most, with 10% growth.
Still, investors remain cautious. Nokia’s share price fell despite stronger revenue figures. The market appears concerned about future margins and spending stability.
The company also faces questions about its mobile network strategy. Nokia is working with Nvidia on AI-RAN technology. This approach uses graphics processors to support radio network functions.
Nokia believes GPUs can improve spectral efficiency in future networks. That matters for 5G and 6G deployments. Yet critics worry about cost and power use.
Ericsson argues it can achieve AI-RAN gains with custom silicon. Nokia now needs commercial contracts to validate its direction. Trials alone will not settle the debate.
Restructuring adds another challenge. Nokia now expects €1.1 billion in full-year restructuring charges. It is accelerating China integration and Infinera-related changes.
“We expect to be 90% complete with the integration of China by the end of this year,” Hotard said. “We are going to deliver a more durable cost base underneath, so I think it’s a positive.”
Nokia has a strong AI-driven growth engine today. But it must protect margins, secure supply, and convert trials into deals. That will decide whether the boom becomes lasting progress.
