Nokia earnings beat estimates as artificial intelligence and cloud demand fuel data center pivot

Nokia Earnings Beat Estimates as Data Center Pivot Shows Promise

Nokia Oyj reported first-quarter adjusted profit that beat analyst forecasts, as its push into artificial intelligence and cloud software paid off. Adjusted operating income was €281 million ($329 million) in the period, the Espoo, Finland-based company said in a statement on Thursday. That compares with an average analyst estimate of about €244 million, according to data compiled by Bloomberg. Net sales were €4.5 billion for the quarter, compared with an analyst estimate of €4.6 billion. The company "delivered a solid start to the year," Nokia's Chief Executive Officer Justin Hotard said in the statement. The company is tracking "above the mid-point" of its full-year guidance of €2 billion to €2.5 billion, he said. Nokia streamlined its business late last year to focus on connecting AI data centers, banking on a global spending boom to fuel sales. It had focused on supplying the backbone kit for mobile phone networks, an area that has stagnated in recent years as anticipated carrier spend on upgrades failed to materialize. Chipmaker Nvidia Corp. took a $1 billion equity stake in Nokia last year and will supply the company with AI-powered computers for wireless networks. The quarter's earnings are the first under Nokia's new structure, and reflect the reorganization of its business into two units. Network Infrastructure comprises the AI data center connectivity arm, while Mobile Infrastructure encompasses its legacy mobile equipment business. It hived off most of its remaining, non-core arms into a portfolio businesses segment, while its defense business became a standalone incubation unit. Nokia's shares have almost doubled over the last year, driven by investor optimism around its AI pivot. While the company hopes to profit from the increasing demand for AI enabling compute, its biggest European rival Ericsson AB warned of rising costs for chips due to an increase in demand when it reported earnings below analysts' expectations last week.

Nokia Bets On AI, Cloud Demand As Optical Networks Gain Momentum - Nokia (NYSE:NOK)

Nokia Corp. (NYSE:NOK) on Thursday posted first-quarter results, highlighting strong momentum in optical networking and a sharp jump in sales tied to AI and cloud customers. Nokia Q1 Results The Finnish company reported net sales of $5.26 billion (EUR 4.5 billion), up 4% year over year, but missed Benzinga's estimates of $5.40 billion. EPS came at $0.06, missing estimates by 3% but increasing 67% year-on-year. The company's Network Infrastructure segment grew 6% year over year, driven by a 20% increase in Optical Networks sales. Mobile Infrastructure sales grew 3% year over year with strength in Core Software (up 5%) and Technology Standards (up 10%). Sales growth at Radio Networks remained flat. Justin Hotard, Nokia's president and CEO, said, "We are increasing our growth assumption for Optical and IP Networks and we are investing to capture accelerating demand from AI & Cloud customers." Nokia's AI Surge: A Game Changer? Hotard tied the quarter's performance to demand from AI and cloud buyers and said the company is leaning further into this market. AI & Cloud sales jumped 49% year over year in the quarter and now account for 8% of group sales. Nokia booked $1.17 billion (EUR 1 billion) in orders from those customers during the quarter. Nokia raised its view for the AI and cloud addressable market, now expecting 27% compounded annual growth from 2025 to 2028, versus 16% previously estimated at its November capital markets day. The company said supply-chain lead times are stretching as investment activity scales up. Optical Networks To Fuel Growth The company, at the OFC optical conference in March, announced a suite of innovations in Optical Networks - four new Digital Signal Processors (DSPs) that power 13 new solutions - to boost network efficiency while reducing the total cost of ownership by up to 70%. These products are expected to begin sampling in mid-2027, with volume production slated for the second half of that year. Nokia also said its indium phosphide manufacturing site in San Jose, CA, remains on schedule to start ramping output later in 2026. Cybersecurity Partnership Strengthens Growth Outlook2026 Outlook For full-year 2026, Nokia maintained its comparable operating profit outlook of $2.34 billion (EUR 2.0 billion) to $2.93 billion (EUR 2.5 billion). Nokia projects network infrastructure sales growth of 12% to 14% on a constant-currency and portfolio basis, including an assumption that optical and IP networks together grow 18% to 20%. It also guided for second-quarter seasonality, expecting net sales to rise 5% to 9% quarter over quarter and Q2 operating profit to represent 12% to 16% of the full-year total. Benzinga Edge Stock Rankings indicate that the NOK has a Momentum score in the 93rd percentile. It maintains a strong price trend in the short, medium and long term with a good Value score in the 49th percentile. Price Action: Nokia shares surged about 12% in pre-market trading. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor. Photo courtesy: Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.