Nokia reports increased demand from AI and cloud customers

Nokia’s amazing comeback story

That company, known for its nearly indestructible phones, is making a huge comeback. Nokia just reported fantastic financial results that crushed expert predictions. This success is driven less by consumer handsets and more by network infrastructure, optical systems, and cloud-and-AI customers.

This remarkable turnaround is fueled by our world’s growing demand for data. From cloud services to advanced AI tools, all that digital power needs a strong backbone. Nokia is building that essential network, proving it has successfully bet on the right future.

Shares soar on stunning results

The stock jumped roughly 10.6% to about €5.20, its highest in over three years, adding around €3 billion to Nokia’s market value in a single day.

This market excitement is a direct response to the company’s solid financial health. The positive reaction shows that confidence in Nokia’s long-term strategy is growing fast. It’s a significant and welcome comeback for a familiar name many had counted out.

Profit crushes expert predictions

The company announced a quarterly profit of €435 million, far surpassing expectations. Analysts had only predicted earnings of around €342 million for the period. This impressive beat shows that Nokia’s strategic shifts are effectively creating financial success.

The profit beat surprised investors and reflects momentum in optical and cloud demand. Though analysts caution that currency swings and previous tariff headwinds have added volatility this year.

Artificial intelligence fuels growth

The exploding demand for AI infrastructure is a major driver of this success. Nokia revealed that business from AI and cloud customers now makes up 6% of its total sales. Within its network infrastructure division, that figure is a substantial 14%.

CEO Justin Hotard calls this moment an AI supercycle, a long-term boom. He believes the push to integrate AI across all sectors is creating a sustained wave of demand. Nokia is strategically positioning itself at the center of this technological revolution.

Optical networks business booms

The star performer this quarter was Nokia’s Optical Networks unit. Its sales skyrocketed by an impressive 19%. This division produces the high-capacity fiber optic cables that form the internet’s backbone.

The acquisition gave Nokia access to Infinera’s optical technology and a stronger North American presence, a strategic step that management says should help capture more data-center work in high-growth markets.

New captain steers the ship

Justin Hotard, appointed President and CEO on April 1, 2025, joined from Intel, where he led the Data Center & AI group. Experience, Nokia says, is central to its pivot toward data-center networking. This expertise is invaluable for Nokia’s ambitious new direction.

Hotard’s appointment signals a definitive pivot from the company’s past. He is steering the entire organization toward opportunities presented by the AI boom. His leadership focuses on making Nokia a dominant force in future connectivity.

Company lifts its annual forecast

Based on its strong performance, Nokia upgraded its profit forecast. The company now expects an operating profit between €1.7 billion and €2.2 billion for the year. This revised guidance provides investors with greater confidence in the company’s financial direction.

This upward revision reflects genuine operational strength and a positive market. The company stated it is solidly on track to hit the midpoint of its new, higher range. This optimism is shared by market analysts watching its progress.

Not your old cell phone maker

Today’s Nokia is vastly different from the phone maker we remember. The company sold its mobile device business over a decade ago. It now focuses on complex networking equipment that allows our digital world to function. This includes everything from 5G systems to undersea data cables.

This strategic evolution was essential for survival and growth. The consumer phone market became intensely competitive. Meanwhile, the need for robust digital infrastructure has exploded, creating a perfect new niche for Nokia’s expertise.

Data centers demand more power

The race to build advanced AI is spiking demand for data centers. These giant facilities require immense and reliable networking capabilities. Nokia is seeing growth across the board, from clients building this critical infrastructure for new AI applications.

CEO Hotard confirms data centers are the primary source of new investment. He notes the industry is seeing a “huge step up in volume” to keep pace with technology. This trend is a powerful tailwind for Nokia’s core networking businesses.

A dedicated AI division forms

Nokia recently created a dedicated Technology and AI organization. This new division will house the famous Nokia Bell Labs, a historic hub of innovation. Its mission is to accelerate the development of AI-powered network solutions for the future.

Leading this crucial team is Pallavi Mahajan, another recruit from Intel. Her appointment underscores how serious Nokia is about competing in the AI space. This internal restructuring is a clear commitment to a future driven by intelligent connectivity.

Cloud services show strong gains

Nokia’s Cloud and Network Services unit also posted excellent results. Its sales grew by a healthy 13% this past quarter. This growth is fueled by telecom operators investing heavily in their 5G core networks worldwide.

The company has climbed to the number one market share in Voice Core technology. This achievement demonstrates that Nokia isn’t just participating in the cloud market. It is decisively becoming a recognized leader in essential segments.

Are we in an AI bubble?

With so much excitement, some experts warn of a potential bubble. Surveys and some market observers warn of froth in AI valuations.

For example, a Bank of America fund manager survey has flagged investor optimism, and commentators, including some industry figures, have cautioned that exuberance could overreach.

Some leaders worry that companies are building data centers, hoping demand will come. This kind of speculative building was a hallmark of the past dot-com bust. The sustainability of the current investment pace remains a key topic of discussion.

Nokia’s leadership stays confident

Nokia’s CEO acknowledges these concerns but remains firmly optimistic. He states that even if a temporary bubble pops, the fundamental trends are solid. Hotard believes the underlying demand for AI infrastructure is real and will continue for years.

His strategy looks beyond short-term market fluctuations. He is confident that the need for faster, more intelligent networks is a permanent shift. This conviction guides Nokia’s continued investment and innovation for the long haul.

Smart partnerships expand reach

Nokia is also forging smart partnerships to expand its reach. It recently signed a deal to become the preferred networking vendor for Nscale. This company is building advanced data centers, creating a valuable new customer for Nokia.

Such collaborations open doors to new projects and fuel further growth. These moves complement the larger acquisition of Infinera. It shows a multi-pronged approach to capturing more of the booming market.

From phones to AI supercycles

Nokia’s journey from mobile phones to AI infrastructure is remarkable. It’s a story of recognizing that a company’s most famous product isn’t always its future. By courageously pivoting to new technologies, Nokia has written a playbook for corporate reinvention.

This comeback shows that established companies can adapt and thrive. The AI supercycle represents a thrilling second act for a company founded in 1865. It proves that with the right vision, it’s possible to reinvent yourself for a new era.

So, what happened to those famously durable phones? Discover the reasons why phones don’t last as long as they used to.

What it means for our future

Nokia’s success is a key indicator of where the tech world is headed. Massive investment in AI and data centers is reshaping the entire technology landscape. As our reliance on artificial intelligence grows, the companies building the underlying networks become increasingly vital.

Nokia’s resurgence shows they have successfully navigated into this crucial lane. Their story suggests that the infrastructure powering our digital lives will be a major area of innovation. For a company once defined by its past, the future now looks incredibly bright.

It really makes you wonder what a true tech upgrade looks like these days. See if the iPhone 17 is a real innovation or just playing it safe.

What’s the most impressive tech comeback story you’ve seen? We’d love to hear your thoughts in the comments.

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This slideshow was made with AI assistance and human editing.