Key Highlights
- Nokia’s Q1 comparable operating profit jumped 54% to €281 million, exceeding analyst forecasts of €250 million
- The company swung to a net profit of €87 million versus a €60 million loss in the prior-year period
- Revenue from AI and cloud customers skyrocketed 49%, generating approximately €1 billion in fresh orders
- The company increased its AI and cloud addressable market growth projection to 27% per year from 16%
- Shares reached their highest point since April 2010, climbing up to 9% during early morning trades
Nokia delivered a first-quarter performance that significantly exceeded Wall Street projections, triggering a strong market response. The Finnish telecommunications equipment manufacturer reported comparable operating profit of €281 million, representing a 54% increase from the previous year and surpassing the analyst consensus estimate of €250 million.
The company achieved a net profit of €87 million, a dramatic reversal from the €60 million loss recorded during the corresponding quarter last year. Operating margin expanded to 6.2%, compared to 4.2% in the year-ago period.
Shares soared up to 9% during early Thursday trading in Helsinki, marking the highest valuation the stock has achieved since April 2010.
Comparable net sales reached €4.5 billion during the quarter, meeting market expectations and representing a 4% increase year-over-year on a constant currency basis.
The AI and cloud segment emerged as the clear star performer. Revenue in this category exploded by 49% and now represents 8% of total group sales. Fresh orders from AI and cloud clients totaled roughly €1 billion throughout the three-month period.
Optical Networks, operating within the Network Infrastructure division, posted exceptional results with 20% organic growth. The overall Network Infrastructure segment expanded by 6% organically, while Mobile Infrastructure registered 3% growth.
Company Dramatically Increases AI Market Growth Projections
Nokia significantly elevated its total addressable market growth estimate for AI and cloud to a 27% compound annual growth rate spanning 2025 through 2028. This marks a substantial increase from the 16% projection provided during its November investor presentation.
The Network Infrastructure TAM growth forecast was upgraded to 12–14% from the previous 6–8% range. Optical and IP networks are now anticipated to expand at 18–20%, considerably higher than the earlier 10–12% estimate.
CEO Justin Hotard attributed these revisions to the AI “supercycle,” noting that demand was intensifying and driving higher investment levels in optical and IP network infrastructure.
The company maintained its full-year comparable operating profit guidance range of €2.0 billion to €2.5 billion, indicating performance tracking somewhat above the midpoint.
Q2 Outlook Introduces Some Uncertainty
Despite the strong quarter, certain indicators suggested caution ahead. Nokia’s second-quarter operating profit guidance fell short of analyst expectations.
Management projected Q2 operating profit to represent 12–16% of full-year operating profit, translating to a figure approximately 20% below consensus at the midpoint.
Free cash flow also turned negative, reaching €-353 million compared to a positive €629 million in Q4 2025.
Barclays, which maintains an “underweight” rating on Nokia with a €5.20 price target, characterized the results as “broadly neutral.” The investment bank highlighted near-term concerns stemming from the disappointing Q2 profit outlook while recognizing the company’s expanding AI business footprint.
The firm noted that AI RAN trials were progressing as planned but observed “little to get excited about on the mobile side.”
However, the Q2 revenue guidance suggested potential upside versus consensus, with the company projecting 5–9% sequential growth.
Nokia’s optical division has emerged as a critical growth engine following its purchase of Infinera, a U.S.-based company, which positioned Nokia as one of the leading global manufacturers of optical transport systems.
The company confirmed that AI and cloud orders during the quarter totaled approximately €1 billion.
