Nokia lifts AI and cloud sales 123% as networking demand drives Q3 growth

Nokia’s AI and cloud customers are buying substantially more networking equipment. In its October 22 third-quarter results, the company reported sales to those customers rose 123% from a year earlier, while order intake increased 118%. The surge strengthens Nokia’s role in AI infrastructure, even as restructuring and preparations for future growth put pressure on profit and cash.

The connections behind the computing

AI infrastructure needs more than processors. It also needs high-speed connections to move information between computing systems. Nokia supplies optical networking equipment and IP networks—the systems that carry and route data. Its acquisition of Infinera strengthened the optical side of that business, as The Motley Fool explained in its earnings analysis.

The results show growth across those networking businesses. Network Infrastructure sales rose 15% at constant currencies, led by 43% growth in IP Networks and 18% in Optical Networks. Those measures describe business lines, rather than sales exclusively to AI customers.

AI & Cloud is a customer grouping, not one of Nokia’s reported operating segments. Sales to those customers reached €631 million in Q3, according to Seeking Alpha’s October 25 analysis. Nokia separately said it secured €1.5 billion in new orders from the group during the quarter. Orders represent future business, rather than revenue already recorded.

CEO Justin Hotard pointed to Nokia’s partnership with Google supporting the latter’s €13 billion investment in Finland as an example of that connectivity role. He also said Nokia expects to complete Infinera’s integration by the end of 2026, a year ahead of plan, with €200 million in net synergies.

Two profit measures tell different stories

Across Nokia, quarterly net sales reached €5.154 billion, up 10% as reported and 9% at constant currencies. The AI and cloud growth rate was therefore far above the companywide pace, but it applied to a much smaller revenue base.

Nokia’s comparable operating profit rose 35% to €605 million. Comparable diluted earnings per share from continuing operations increased 50% to €0.09. These are the company’s adjusted measures; they should not be confused with its reported results.

Reported operating profit fell 22% to €196 million. Nokia attributed the decline in reported operating margin to accelerated restructuring and integration costs. Revenue growth and operating efficiency improved the comparable margin, while those costs weighed on the reported figure.

Q3 operating margins

0111.7%

Comparable

Nokia’s comparable operating margin increased 2.2 percentage points from a year earlier.

023.8%

Reported

Reported operating margin declined 1.6 percentage points, reflecting restructuring and integration costs.

Funding the next wave of orders

The stronger demand outlook also brings immediate cash needs. Nokia lowered its 2026 assumption for converting comparable operating profit into free cash flow to 35%–55%. It said working-capital investment to secure supply and support growth in 2027, along with accelerated restructuring, drove that revision.

The company now plans an additional €400 million in working capital this year. It also increased the scale of some restructuring programs to simplify operations and its location strategy. Its updated assumptions include €1.1 billion in restructuring and associated charges, with related cash outflows of €800 million–€900 million.

Nokia reduced its capital-expenditure assumption to €750 million–€850 million, partly because some manufacturing-related payments will move into 2027. It said its optical manufacturing expansion remains on track. The lower spending assumption does not mean it has abandoned that capacity plan.

Despite the sales momentum, Nokia left its full-year comparable operating-profit outlook unchanged at €2.1 billion–€2.6 billion. Looking further ahead, management expects combined Optical and IP Networks sales to grow 25%–30% in 2027. That forecast sets a future delivery target; the current quarter establishes demand, not the eventual return on the cash Nokia is committing.