Nokia Profit Surges 35 Percent as Artificial Intelligence Data-Centre Demand Accelerates

Nokia reported that its comparable operating profit rose by 35 percent in the third quarter, reaching €605 million. Strong demand for networking equipment used in artificial intelligence (AI) data centres helped the Finnish telecommunications company earn more than analysts had expected.

The company announced these strong financial results on Thursday. They show that Nokia is moving from mainly supplying mobile network equipment to becoming an important supplier of AI technology and equipment. Sales for the quarter rose 10 percent compared with the same period last year, reaching €5.15 billion. This was more than the market had expected. Nokia's comparable operating profit margin, which measures how much profit it makes from sales, rose by 220 basis points, or 2.2 percentage points, to 11.7 percent.

Most of the growth came from Nokia's Network Infrastructure division. Sales in this division rose 15 percent after adjusting for changes in currency values. Sales to AI and cloud customers jumped 123 percent. New orders from these customers also rose 118 percent to €1.5 billion. These orders give Nokia a better idea of how much money it may earn in the future.

Network Infrastructure Drives Growth

Within the Network Infrastructure division, revenue from IP Networks rose 43 percent, while Optical Networks revenue grew 18 percent. These technologies work like high-capacity pipes, carrying huge amounts of data between data centres and within them. These data centres power large language models and other AI applications.

Nokia CEO Justin Hotard said the company's technology is well suited to meet the growing needs of AI systems that depend on many connected networks. The sharp rise in orders from very large data-centre operators and cloud service providers supports Nokia's plan to benefit from the rapid growth of AI. AI requires network systems that can handle computing work across different locations and manage it intelligently.

Nokia expects its Optical Networks and IP Networks businesses together to grow by 25 to 30 percent in 2027 as companies continue building more AI capacity. This marks a major change for Nokia. The company once dominated the global mobile phone market, but sold its handset business in 2014 to focus on telecommunications infrastructure.

Restructuring Costs Impact Reported Profit

Although Nokia's comparable figures showed strong business growth, its reported operating profit told a different story. Reported operating profit fell 22 percent to €196 million. The main reason was €357 million in costs for restructuring and combining businesses during the quarter.

Nokia is making major changes to how it runs its business. These changes include bringing Infinera, a US-based optical networking company, into its operations. Nokia bought Infinera to strengthen its position in North America and build stronger relationships with major cloud service providers. Nokia plans to finish combining the two businesses by the end of 2026. It aims to gain €200 million in net savings and other benefits from the deal, one year earlier than originally planned.

Nokia's reported gross profit margin also fell by 220 basis points, or 2.2 percentage points, to 42.2 percent. This reflected the high costs of the restructuring plan. However, its comparable gross profit margin remained mostly steady at 44.6 percent.

Mobile Infrastructure and Future Outlook

Outside the data-centre business, Nokia's Mobile Infrastructure division reported a 5 percent increase in net sales. The company said part of this growth came from moving the recording of some sales from the fourth quarter into the third quarter. The division also benefited from selling a better mix of products, managing business deals carefully, and continuing its efforts to cut costs.

Nokia has partnered with NVIDIA to develop AI-based radio access networks (AI-RAN). The goal is to turn traditional mobile phone towers into small computing centres near users. This could reduce delays when people use network services and create new ways for network operators to earn money from businesses. The partnership comes as the industry begins preparing for 6G networks.

Despite changes in reported profit caused by restructuring costs, Nokia kept its full-year financial forecast unchanged. It repeated its target for comparable operating profit of between €2.1 billion and €2.6 billion in 2026. The company expects sales in the fourth quarter to rise by 20 to 24 percent compared with the third quarter, supported by its strong order backlog of €1.5 billion.

Nokia is preparing its networks for a future in which AI computing takes place not only in large central data centres but also in applications used in the real world. These applications will need networks that offer better performance, security and reliability. By winning major contracts for AI infrastructure, Nokia is trying to reduce its dependence on the usual cycles of rapid growth and slowdown in mobile network upgrades. It aims to build a steadier source of income as computing capacity continues to grow around the world over the long term.