Nokia Reports Continued Strength From Data-Center Rollout — Update

By Dominic Chopping

Nokia continues to see strong growth from data-center customers, as the Finnish company capitalizes on its pivot to supplying key infrastructure for the artificial-intelligence rollout.

The company said Thursday that third-quarter sales in its network infrastructure business--the unit that houses AI and data-center networking technology--rose 17% on year, driven by demand from AI and cloud customers in the Americas.

It booked 1.5 billion euros ($1.68 billion) of orders from AI and cloud customers in the quarter and still sees overall sales in the network infrastructure business growing 12%-14% this year.

"In AI & Cloud, net sales more than doubled year over year," Nokia Chief Executive Justin Hotard said. "Our strong order backlog also positions us for future growth."

Nokia last year completed the $2.3 billion acquisition of optical networking provider Infinera as part of plans to expand its offering of specialist gear used in data centers. It said Thursday that it is on track to complete the Infinera integration by the end of 2026, one year ahead of plan and with 200 million euros of net synergies.

However, booming AI infrastructure spending has created shortages of key components such as semiconductors, pushing up costs. Hotard has previously noted that customers are placing longer-term orders to secure supply.

Nokia has been looking at ways to secure supply, including the ramp-up of a recently acquired semiconductor plant in San Jose, U.S., which Hotard said on a call with reporters is well on track.

"We expect to be running 24/7 operations by the end of October," he said.

Constraints are unlikely to ease any time soon though, as the entire semiconductor supply chain remains tight.

"It looks like 2028 is going to continue to be probably tight, so 2027 into 2028, and that may be where we start to see some relief," Hotard said on the call. "We're anticipating and planning for the foreseeable future, certainly in 2027 to have these constraints."

At Nokia's mobile infrastructure equipment unit--its traditional mobile-communication technology and services business--sales rose 5% on year, with Japan, India and Europe, Middle East and Africa showing the strongest growth.

The company still expects to report a full-year group comparable operating profit above the midpoint of its guidance range between 2.1 billion and 2.6 billion euros, despite expecting higher restructuring and cost-saving charges of 1.1 billion euros, up from a previous estimate of 800 million euros.

The higher expected costs come as Nokia has increased the scale of some of its restructuring programs as it accelerates the integration of Infinera, simplifies its operations in China and ups investment in some other areas.

Nokia posted a 35% rise in group comparable operating profit to 605 million euros for the third quarter, beating the 342 million euros expected in a FactSet poll.

Sales rose to 5.15 billion euros against the 5.06 billion-euro FactSet estimate.

The company said it assumes fourth-quarter sales will increase between 20% and 24% on the quarter with a "typically strong quarter-on-quarter" increase in operating profit.

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

(END) Dow Jones Newswires

October 22, 2026 04:12 ET (08:12 GMT)