Nokia’s shares surged to a 16-year high on Thursday after the Finnish telecom equipment maker reported stronger-than-expected quarterly earnings and raised its growth outlook for its artificial intelligence-focused business.
Shares listed in Finland climbed more than 9%, reaching their highest level since April 2010 when it was only known as a phone company, while the company’s New York-listed shares gained nearly 11% in pre-market trading.
The rally reflects growing investor confidence in Nokia’s strategy to reposition itself beyond traditional telecom markets and tap into demand from AI and cloud computing.
AI demand drives earnings beat
The company reported a 54% jump in comparable operating profit to 281 million euros ($329 million) in the first quarter of 2026, comfortably exceeding the 250 million euros expected by analysts surveyed by Infront.
Nokia has increasingly aligned its business around two core segments: mobile infrastructure, which includes its legacy telecom equipment operations, and network infrastructure, which focuses on AI-driven and data centre networking solutions.
Growth was particularly strong in the network infrastructure division, where sales rose 12% year-on-year.
The company said demand was driven by hyperscale cloud providers investing heavily in AI data centres, particularly in the Americas.
Nokia booked 1 billion euros ($1.17 billion) in orders from AI and cloud customers during the quarter, while net sales from this segment surged 49%.
The company now expects the addressable market for AI and cloud infrastructure to grow at an annual rate of 27% between 2025 and 2028, significantly higher than its earlier estimate of 16%.
Outlook upgraded on strong network demand
Reflecting the strong momentum, Nokia raised its full-year growth outlook for its network infrastructure business.
It now expects sales in the segment to grow between 12% and 14% this year, up from its previous forecast of 6% to 8%.
The upgrade was driven by robust demand for optical transport and internet protocol networks, areas that are becoming increasingly critical for supporting AI workloads and high-speed data transmission.
“As a result, we are currently tracking somewhat above the mid-point of our full year financial outlook of 2.0 billion to 2.5 billion euros in comparable operating profit,” CEO Justin Hotard said in a statement.
Analysts said the improved outlook signals a strengthening demand environment.
Inderes analyst Atte Riikola noted that the most significant takeaway from the results was “a clear increase in the growth outlook for optical and internet protocol networks,” reflecting improved market conditions.
Jefferies analyst Janardan Menon also highlighted the company’s strong margins, noting that Nokia’s gross margin of 45.5% exceeded expectations of 42.9%.
He said the results could lead to further upgrades in earnings forecasts and a re-rating of the stock.
Legacy business faces pressure
While the network infrastructure segment delivered strong growth, Nokia’s traditional mobile infrastructure business continued to face challenges.
Sales in the division declined 3% year-on-year, as gains in regions such as Europe, the Middle East and Africa and Latin America were offset by weaker demand in North America.
The company has been working to diversify its revenue streams following years of pressure in the telecom equipment market, where spending by operators has been uneven.
Nokia’s transformation has also been supported by acquisitions, including its purchase of US-based Infinera, which strengthened its position in optical networking.
Supply chain risks monitored
Despite ongoing geopolitical tensions, including disruptions linked to the Middle East conflict, Nokia said the direct impact on its operations remains limited for now.
“Obviously this is something we’re watching closely,” Hotard said. “But right now we see this as not having a material shift.”
The company is also reviewing its product designs to reduce manufacturing costs, aiming to improve efficiency as it scales up production to meet growing demand.
With AI and cloud infrastructure emerging as key growth drivers, Nokia’s latest results suggest that its strategic pivot is beginning to gain traction, even as challenges persist in its legacy business lines.
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