Nokia Reports Sharp Rise in Demand From AI and Cloud Customers — Update

By Dominic Chopping

Nokia reported a sharp rise in sales of its network infrastructure equipment on surging demand from artificial intelligence and data-center customers in North America.

Shares jumped 11% in early European trade.

The Finnish telecom-equipment provider's strategic focus has been increasingly shifting to network infrastructure, where data centers and AI investments are creating new growth opportunities for the company. Around 6% of the company's group sales in the third quarter came from AI and cloud customers.

Network infrastructure sales rose 28% on year.

"AI is driving the data center build out today," Chief Executive Justin Hotard said on a media call after the earnings. "We're still at the very early innings of what will be a tremendous AI super cycle."

Third-quarter sales of Nokia's mobile networks equipment fell 0.6% on year, as a decline in Europe offset growth in parts of the Asia Pacific region. Sales in the Americas were stable and overall the business unit is showing signs of stabilizing, the company said.

The mobile networks business has recently seen a rapid period of 5G deployments in India come to end while its performance in North America is adjusting following a period where results were skewed by the loss of a large contract from AT&T to rival Ericsson.

The mobile networks gross margin fell to 34.8% in the quarter from 38.5%, mainly due to lower sales of more profitable software, while in network infrastructure the margin slipped to 40.2% from 42.1%.

Nokia lifted full-year guidance slightly due to a change in how it presents its venture-fund investments, and now expects comparable operating profit of 1.7 billion to 2.2 billion euros ($1.97 billion-$2.55 billion), up from 1.6 billion to 2.1 billion euros previously. It is tracking to the midpoint of the range.

"If you look at our fourth quarter, our backlog coverage entering the quarter is stronger than it's been in recent years," Hotard said on the media call.

The company expects fourth-quarter sales to be slightly above normal seasonality in terms of sequential growth, providing confidence in delivering on the guidance range, he added.

The company posted a 8.2% drop in third-quarter group comparable net profit attributable to shareholders to 323 million euros, beating the 269 million euros expected in a FactSet poll.

Sales rose to 4.83 billion euros, ahead of the 4.64 billion-euro FactSet estimate, while comparable operating profit dropped to 435 million euros.

Nokia said it will pay a dividend of 3 euro cents a share on Nov. 6.

Hotard, who took charge in April, said he will detail his strategy and vision for the company at a capital markets day on Nov. 19.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

October 23, 2025 03:42 ET (07:42 GMT)