Nokia’s latest results show how the artificial intelligence boom is spreading beyond chips and data centres into the networks that connect them. The Finnish technology group reported triple-digit growth in sales to AI and cloud customers in the third quarter of 2026, while new orders from those customers climbed even faster than the company’s overall business.
The figures point to a growing infrastructure opportunity: as technology companies expand AI computing capacity, they also need faster optical connections, high-capacity IP networks and reliable systems to move enormous volumes of data. Nokia’s results suggest that this supporting infrastructure is becoming a significant growth engine.
AI Orders Signal a Structural Shift
Nokia’s net sales reached €5.15 billion in the third quarter, up 10% on a reported basis and 9% when adjusted for currency movements. Comparable operating profit increased 35% to €605 million, while the comparable operating margin expanded to 11.7%, from 9.5% a year earlier.
The strongest momentum came from Network Infrastructure. Sales in the segment rose 15% on a constant-currency basis, with IP Networks growing 43% and Optical Networks increasing 18%. These technologies are central to moving data between servers, data centres and cloud platforms as AI workloads become more demanding.
Why Optical Networks Matter
AI systems require more than powerful processors. Training and running advanced models can involve large flows of information between thousands of processors and storage systems. Network bottlenecks can limit how effectively computing capacity is used, increasing the importance of high-speed optical links and scalable IP infrastructure.
For Nokia, this creates an opportunity to benefit from investment in AI infrastructure without needing to compete directly with chipmakers. Its networking equipment can support the connections that link data centres and carry traffic through increasingly complex cloud environments.
Nokia reported that sales to AI and cloud customers rose 123% year over year, while order intake from those customers increased 118% to approximately €1.5 billion. The gap between current sales and incoming orders is worth watching: orders can indicate future demand, although their conversion into revenue depends on delivery schedules, customer investment plans and project execution.
Profitability Improves, With Caveats
The stronger comparable figures do not tell the whole story. Nokia’s reported operating profit fell 22% to €196 million, and its reported operating margin declined to 3.8% from 5.4%. The difference reflects restructuring and integration costs, illustrating how costs associated with organisational changes can weigh on statutory results even as underlying operations improve.
The company maintained its full-year 2026 comparable operating profit outlook of €2.1 billion to €2.6 billion. It also expects its combined Optical and IP Networks businesses to grow between 25% and 30% in 2027.
However, Nokia lowered its expected free-cash-flow conversion to 35%–55% of comparable operating profit, citing additional working-capital investment to secure supply and support expected growth. It plans to invest an additional €400 million in working capital during 2026. That means strong demand will need to translate into cash generation, not simply higher orders and accounting profit.
The Wider AI Infrastructure Trade
Nokia’s performance adds to evidence that AI-related spending is reaching a wider group of technology suppliers. Semiconductor manufacturers and cloud providers remain central to the investment cycle, but connectivity vendors can also benefit as operators expand capacity and connect increasingly distributed computing infrastructure.
The opportunity is not without risk. Customer spending may change with economic conditions, technology priorities or the pace at which AI services become commercially viable. Nokia also faces competition, supply-chain pressures and the challenge of converting large project pipelines into profitable, cash-generating business.
The next indicators to watch are order conversion, continued growth in optical and IP networking, and whether improved comparable margins are accompanied by stronger reported earnings and cash flow.
What Investors Will Watch
Nokia’s third-quarter results suggest that AI is becoming a meaningful demand driver for its networking business. Triple-digit growth in AI and cloud sales, a sharp increase in order intake and stronger comparable profitability provide evidence that the company is participating in the infrastructure buildout behind the AI economy.
The key test is durability. If elevated orders translate into sustained revenue and cash generation, Nokia’s network infrastructure operations could become an increasingly important contributor to its financial performance. If customer investment slows or working-capital demands rise, the benefits may take longer to appear in cash flow.
The broader message is clear: the AI investment cycle extends well beyond computing chips. The networks that connect AI infrastructure are becoming an important part of the market’s next phase.
