• Quarterly AI and cloud orders reach €1bn, as hyperscaler demand extends delivery backlogs.
  • Optical networks grow 20%, far outpacing IP networks at 3%—AI workloads push demand down to the fibre layer.

What happened

Nokia reported a sharp acceleration in its AI and cloud business, booking €1 billion in orders in a single quarter, driven primarily by hyperscaler demand for fibre-based data centre infrastructure supporting AI workloads.

Total net sales rose 4% at the start of the year, reaching a 16-year high, with AI and cloud revenue increasing 49% year-on-year, making it the fastest-expanding segment in the portfolio.

The growth was underpinned by strong demand for optical networking systems, which increased 20%, significantly outpacing IP Networks, which grew only 3%, while overall network infrastructure sales rose 6%.

Nokia said AI-related demand momentum is extending delivery timelines, reflecting a strengthening backlog tied to large-scale hyperscaler infrastructure rollouts.

The company also upgraded its AI and cloud market outlook, raising expected addressable growth from 16% to 27% for 2025-2028, and lifted full-year comparable operating profit guidance to €2-2.5 billion.

Why it's important

This set of results signals a structural re-rating of Nokia's growth model, shifting from cyclical telecom equipment demand toward AI-driven data centre infrastructure expansion.

The key inflection point is not revenue growth, but the composition of demand: €1 billion in quarterly AI and cloud orders indicates a move from exploratory spending to contracted hyperscaler deployment cycles, anchoring Nokia more directly to long-duration AI capex programmes from cloud providers.

The performance gap between optical networks (+20%) and IP Networks (+3%) highlights a deeper architectural shift: AI workloads are pushing network constraints down the stack, increasing pressure on fibre and interconnect layers inside and between data centres, rather than traditional routing and IP upgrade cycles.

The upward revision of the AI and cloud addressable market to 27% further reinforces a longer-cycle re-anchoring of expectations, effectively resetting Nokia's medium-term growth narrative around AI infrastructure build-out intensity rather than telecom replacement demand.

Collectively, Nokia is being repositioned as a connectivity layer provider in the AI infrastructure stack, with growth increasingly defined by hyperscaler-driven optical capacity expansion and global data centre scaling cycles.

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