Key Highlights
- Q1 comparable operating profit climbed 54% to €281 million, surpassing analyst projections of €250 million
- The company posted net profit of €87 million, a reversal from the €60 million loss recorded last year
- Revenue from AI and cloud operations jumped 49%, generating approximately €1 billion in fresh orders
- The company increased its AI and cloud addressable market growth projection to 27% per year from 16%
- Shares reached their highest valuation since April 2010, climbing up to 9% during morning trade
Nokia delivered a standout first quarter performance that significantly exceeded Wall Street expectations, triggering a strong market response. The Finnish telecommunications equipment manufacturer reported comparable operating profit of €281 million, representing a 54% increase from the previous year and comfortably above the €250 million analyst consensus.
The bottom line showed dramatic improvement, with net profit of €87 million compared to a €60 million deficit in the corresponding quarter last year. Operating margin expanded to 6.2%, a notable improvement from the 4.2% recorded twelve months earlier.
Shares leaped as much as 9% during Thursday morning trading in Helsinki, marking the company’s strongest price level since April 2010.
Comparable net sales totaled €4.5 billion during the quarter, meeting market expectations and representing a 4% year-over-year increase when adjusted for currency fluctuations.
The AI and cloud division emerged as the star performer, posting explosive 49% growth and representing 8% of total group revenue. Orders from AI and cloud customers reached approximately €1 billion during the three-month period.
The Optical Networks division, which operates under the Network Infrastructure segment, delivered impressive 20% organic expansion. The overall Network Infrastructure segment achieved 6% organic growth, while Mobile Infrastructure advanced 3%.
Company Significantly Raises AI Market Projections
Nokia substantially upgraded its total addressable market growth estimate for AI and cloud operations to a 27% compound annual growth rate spanning 2025 through 2028. This represents a dramatic increase from the 16% figure presented during a November investor presentation.
The Network Infrastructure TAM growth forecast was elevated to 12–14% from an earlier projection of 6–8%. Growth expectations for optical and IP networks were revised upward to 18–20%, compared to the previous 10–12% estimate.
CEO Justin Hotard attributed the revisions to an AI “supercycle,” noting that demand momentum was building and driving heightened capital allocation toward optical and IP network infrastructure.
The company maintained its full-year comparable operating profit outlook of €2.0 billion to €2.5 billion, noting performance was trending modestly above the midpoint.
Q2 Outlook Introduces Some Uncertainty
However, not all indicators pointed upward. Nokia’s second quarter operating profit forecast fell considerably short of analyst expectations.
Management guided for Q2 operating profit representing 12–16% of annual operating profit, suggesting a figure approximately 20% below consensus estimates at the middle of the range.
Cash generation also deteriorated, with free cash flow turning negative at €-353 million, contrasting with the positive €629 million recorded in Q4 2025.
Barclays, which maintains an “underweight” rating on Nokia with a €5.20 price objective, characterized the quarter as “broadly neutral.” The firm highlighted near-term headwinds from the disappointing Q2 profit outlook while recognizing Nokia’s expanding presence in AI infrastructure.
The investment bank noted that AI RAN testing programs were progressing as planned but observed “little to get excited about on the mobile side.”
The Q2 revenue forecast did suggest potential upside relative to consensus, with the company projecting 5–9% sequential expansion.
Nokia’s optical operations have emerged as a critical growth engine following its purchase of U.S.-based Infinera, a transaction that positioned the company among the world’s leading manufacturers of optical transport equipment.
The company confirmed that AI and cloud orders for the quarter reached approximately €1 billion.
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