Nokia reported growth signals in its AI infrastructure business as traditional vendors pivot toward AI compute.
Nokia has emerged from years of sluggish growth in telecom infrastructure to demonstrate significant expansion in AI and datacenter networking. In its quarterly earnings announced in early October 2025, the Finnish company reported 9% overall revenue growth, with its stock vaulting 10% in U.S.-based trading following the results. The company reported third-quarter profit ahead of market expectations, driven by strong optical and cloud demand. Artificial intelligence and cloud customers accounted for 6% of group net sales and 14% of network infrastructure sales, with optical networks up 19%. This turnaround reflects the strategic vision of former CEO Pekka Lundmark, who recognized the need to diversify away from the disappointing returns of the 5G infrastructure investment cycle.
The financial gains underscore the success of Nokia's strategic investments in datacenter infrastructure. Network infrastructure showed impressive growth of 11%, reaching €1.95 billion ($2.26 billion US), while Cloud and Network Services surprised analysts with sales of €645 million ($750 million US), 17% above estimates according to Raymond James. Nokia now expects annual operating profit between 1.7 billion and 2.2 billion euros, a slight upgrade to the previous range of up to 2.1 billion euros. These results were bolstered significantly by the completion of Nokia's $2.3 billion acquisition of optical networking specialist Infinera, which was announced in 2024 and finalized this year.
Leadership changes have positioned Nokia for continued growth in the AI infrastructure market. Pekka Lundmark stepped down as CEO earlier this year, handing the reigns to Justin Hotard, an American with a background in datacenter and enterprise who previously held executive roles at Intel, Hewlett Packard Enterprise, and NCR Corporation. Hotard took the role on April 1, 2025, and emphasized the company's strong momentum, stating on the earnings conference call: "We have seen some improvements in CSP expectations, along with the strong order intake I mentioned in AI and cloud. In fact, entering the fourth quarter, our backlog coverage is stronger than in recent years. We're also pleased with our progress on the Infinera acquisition."
Nokia's customer portfolio demonstrates its success in capturing high-value AI infrastructure deals. The company has anchored relationships with CoreWeave, a recent IPO specializing in GPU clouds, and analysts suggest larger deals may be in the pipeline with Meta and Google. According to Raymond James analysts Simon Leopold, "We believe Nokia shares a new Meta optical scale-across project with Ciena, and the optical book-to-bill again meaningfully exceeded 1x. IP traction is emerging with footholds with Microsoft, Google, and CoreWeave, and a new deal with Nscale." Nokia's SR Linux operating system, which is open-source and flexible, has become a key differentiator, with customers praising its simplicity, reliability, economics, and energy efficiency—a critical factor for large-scale AI networking infrastructure.
Wall Street has responded enthusiastically to Nokia's transformation, with major analysts raising their price targets. Raymond James lifted its target to $6.50 from $5, while Deutsche Bank increased its estimate to €4.25 from €4.75 on European exchanges. Nokia now stands well-positioned with a comprehensive portfolio of datacenter networking products, including its high-performance SR Linux-powered routing and switch portfolio and Infinera optical products. As the company enters what may represent a new era, it has successfully repositioned itself as a major supplier of networking infrastructure for data centers and AI applications, moving decisively away from its constrained telecom past.