Nokia (NYSE:NOK) reported stronger second-quarter results on Thursday, as surging demand for artificial intelligence infrastructure and cloud networking helped lift sales and profitability despite restructuring costs.
The Finnish telecommunications equipment maker delivered solid growth across its Network Infrastructure business, while AI-related orders reached a record level during the quarter.
Revenue and operating profit increase
Nokia reported second-quarter net sales of €4.82 billion, an increase of 8% from a year earlier, or 9% on a constant-currency basis.
Comparable operating profit rose 18% to €434 million, while the comparable operating margin improved to 9.0% from 8.3% in the same period last year.
Despite the stronger operating performance, Nokia’s shares reversed early gains and traded lower after the earnings release as investors assessed the company’s outlook.
AI and cloud demand drives growth
The company’s Network Infrastructure division continued to be the primary growth engine, with sales rising 12% on a constant-currency basis.
Optical Networks revenue increased 20%, while IP Networks recorded 16% growth during the quarter.
Revenue generated from AI and cloud customers more than doubled, climbing 105% year over year as hyperscale and enterprise customers continued investing heavily in AI infrastructure.
Chief Executive Officer Justin Hotard said Nokia is benefiting from the ongoing AI “supercycle,” adding that AI and cloud order intake reached €2.8 billion during the second quarter.
According to the company, approximately half of those orders are expected to convert into revenue over the next 12 months.
Restructuring charges weigh on reported earnings
Accelerated restructuring expenses pushed Nokia to a reported operating loss of €50 million, compared with an operating profit of €147 million in the same quarter last year.
However, the company stressed that its underlying operating performance remained strong after excluding those one-off costs.
JPMorgan analyst Sandeep Deshpande said, “The key number in Nokia’s report was the AI and cloud orders of €2.8bn up from €1bn in the prior quarter. This figure is dramatically higher than any number we have heard from investors in the past quarter.”
He added, “The concern investors may have with the report is likely to be why Nokia has not raised guidance for 2026, especially as the company indicates that it expects half of the reported orders to convert to sales in the next 12 months.”
Separately, analysts at Morgan Stanley highlighted what they described as “exceptionally strong AI demand” following the earnings release.
Outlook remains unchanged
Nokia maintained its operational outlook for 2026 despite the strong order momentum.
Following the reclassification of two businesses as discontinued operations, the company adjusted its comparable operating profit guidance to a range of €2.1 billion to €2.6 billion, compared with its previous range of €2.0 billion to €2.5 billion.
Management said it continues to expect full-year results to come in somewhat above the midpoint of the updated guidance range.