Nokia Q2 profit beats expectations as AI data-centre demand doubles cloud sales to €446 million

Nokia Q2 Profit Beats Forecasts Driven by AI Demand

Nokia delivered a strong second quarter in 2026, with comparable operating profit climbing 18% to €434 million, comfortably surpassing the €382 million average estimate from analysts polled by LSEG 1

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. The Finnish telecommunications equipment maker benefited from surging AI demand as major technology companies accelerated investments in data centre infrastructure. Net sales rose 8% to €4.82 billion, or 9% at constant currency, exceeding market expectations 2

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. The beat extended momentum from earlier in the year, when comparable operating profit jumped 54% in the first quarter.

AI and Cloud Order Intake Reaches €2.8 Billion

Demand from AI and cloud customers proved to be the standout driver, with sales to this segment more than doubling year-on-year to reach €446 million 3

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. Even more striking was the AI and cloud order intake of €2.8 billion during the quarter, signaling sustained momentum as customers move to secure scarce supply 4

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. CEO Justin Hotard noted that "demand remains strong, while supply continues to be the main industry constraint, prompting our customers to place longer-term orders." The substantial gap between orders booked and revenue recognized points to a lengthening backlog, with roughly half of these orders expected to convert to revenue over the next 12 months.

Network Infrastructure Division Powers Growth

Nokia's Network Infrastructure division carried the quarter with sales up 12% to €2.04 billion 2

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. Within this unit, Optical Networks grew 20% and IP Networks expanded 16%, both supplying the optical networking and routing equipment that hyperscalers are deploying to wire AI clusters together and link data centres across long distances. The company has been shifting focus to selling fibre-optic cables to big tech companies building AI data centres, a strategic pivot that CEO Hotard has prioritized since taking over from Intel's Data Center & AI Group in 2025 1

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. This move positions Nokia to capitalize on what Hotard describes as the "AI supercycle," a sustained period of infrastructure investments driven by artificial intelligence workloads 3

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Restructuring Charges Impact Reported Earnings

While comparable figures painted a positive picture, the reported bottom line told a different story. Nokia swung to an operating loss of €50 million and posted net profit of just €5 million, down sharply from €96 million a year earlier 2

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. The group attributed this drop to restructuring charges projected to amount to €800 million for the full year 4

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. These charges include €350 million tied to integrating operations in China, €200 million for European restructuring, and €250 million under an earlier cost-cutting program. Despite the near-term hit, these moves are designed to streamline operations and improve long-term profitability as Nokia reorients toward AI infrastructure investments.

Supply Constraints and Rising Memory Chip Prices

Nokia faces headwinds from supply constraints and escalating memory chip prices driven by AI companies cornering the market 1

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. Rival Swedish telecoms equipment maker Ericsson warned last week about pressure from rising memory chip costs, sending its shares tumbling on investor worries about margin compression 5

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. Nokia's second-quarter results suggest it is absorbing the cost increases for now, though the company acknowledged that supply continues to be the main industry constraint. The tight component market has prompted customers to place longer-term orders to secure capacity, which explains the substantial order backlog relative to current shipments.

Nokia Raises Full-Year Outlook

Reflecting confidence in sustained demand, Nokia raises full-year outlook for comparable operating profit to between €2.1 billion and €2.6 billion, up from €2.0 billion to €2.5 billion 5

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. Hotard said the group was on track to finish "somewhat above the midpoint" of that range. However, the raised guidance leaves much of the year to play for, as Nokia earned roughly €715 million of comparable operating profit across the first half, meaning the top of its €2.6 billion target depends on the second half delivering close to €1.9 billion 2

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. This back-loaded projection leaves little room for slippage and will test whether the €2.8 billion order book converts into the second-half momentum management is promising. The company also strengthened its AI capabilities through a billion-dollar partnership with chipmaker Nvidia, positioning itself to serve the expanding data centre market 5

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