Key Highlights
- First-quarter comparable operating profit reached €281 million, marking a 54% increase and surpassing the €250 million analyst forecast
- Company returned to profitability with net earnings of €87 million, compared to a €60 million deficit in the prior-year period
- AI and cloud revenue jumped 49%, accompanied by approximately €1 billion in fresh orders from these customer segments
- Management upgraded AI and cloud addressable market growth projection to 27% per year, revised upward from 16%
- Shares reached their peak level since April 2010, climbing up to 9% during morning trading
The Finnish telecommunications equipment manufacturer delivered first-quarter results that significantly exceeded market expectations, triggering a strong positive response from investors. Nokia reported comparable operating profit of €281 million, representing a 54% year-over-year increase that topped the analyst consensus forecast of €250 million.
The company returned to profitability with net earnings of €87 million, a dramatic turnaround from the €60 million loss recorded during the same quarter last year. Operating margin expanded to 6.2%, compared with 4.2% in the year-ago period.
Shares climbed as much as 9% during Thursday’s early trading session in Helsinki, reaching their highest point since April 2010.
Comparable net sales totaled €4.5 billion for the quarter, aligning closely with market projections and representing a 4% year-over-year increase on a constant currency basis.
The AI and cloud segment emerged as the star performer. Revenue from this division surged 49% and represented 8% of total group sales. Fresh orders from AI and cloud clients reached approximately €1 billion during the three-month period.
Optical Networks, which operates within the Network Infrastructure segment, delivered exceptional results with 20% organic growth. The overall Network Infrastructure segment posted 6% organic expansion. Mobile Infrastructure recorded 3% growth.
Company Substantially Raises AI Market Growth Projections
Nokia increased its total addressable market growth estimate for AI and cloud to a 27% compound annual growth rate spanning 2025 through 2028. This represents a substantial upward revision from the 16% rate projected during a November investor presentation.
Network Infrastructure TAM growth received an upgrade to 12–14% from an earlier 6–8% forecast. Optical and IP networks now carry an expected growth rate of 18–20%, a significant increase from the previous 10–12% estimate.
Chief Executive Justin Hotard attributed the changes to an AI “supercycle,” noting that demand continues to accelerate and drive heightened investment 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, adding that performance currently tracks somewhat above the range’s midpoint.
Second Quarter Guidance Suggests Softer Performance
The quarter brought mixed signals. Nokia’s second-quarter operating profit guidance fell well short of analyst expectations.
Management provided Q2 operating profit guidance at 12–16% of full-year operating profit, suggesting a figure approximately 20% below consensus estimates at the midpoint.
Free cash flow reversed course, moving to negative €353 million from a positive €629 million in Q4 2025.
Barclays, which maintains an “underweight” rating on Nokia with a €5.20 price target, characterized the quarter as “broadly neutral.” The investment bank highlighted near-term concerns stemming from the disappointing Q2 profit outlook while recognizing Nokia’s expanding AI market exposure.
The brokerage noted that AI RAN trials remain on schedule but expressed limited enthusiasm regarding the mobile business segment.
Revenue guidance for Q2 did suggest potential upside relative to consensus, with the company projecting 5–9% sequential growth.
Nokia’s optical division has become a critical growth engine following the company’s purchase of U.S.-based Infinera, a transaction that positioned Nokia among the world’s leading manufacturers of optical transport systems.
The company confirmed that AI and cloud orders for the quarter totaled approximately €1 billion.
