Nokia reported a solid start to 2026 with growth driven by optical networking and accelerating demand from AI infrastructure buildouts. Comparable net sales reached €4.5 billion, up 4% year-over-year, while gross margin expanded to 45.5% and operating margin to 6.2%. AI & Cloud emerged as a key growth engine, with revenue rising 49% and generating €1 billion in new orders during the quarter, underscoring rising hyperscaler and data center demand.
Within Network Infrastructure, Nokia’s core growth segment, revenue increased 6% year-over-year, led by Optical Networks, which grew 20% to €821 million. The company attributed this to strong order intake from AI and cloud customers, including demand for data center interconnect (DCI) systems, pluggables, and line systems. IP Networks grew 3%, supported by AI-driven data center switching and routing demand, while Fixed Networks declined 13% as Nokia shifts toward higher-margin fiber and infrastructure products.
Nokia also highlighted new optical innovations introduced at OFC, including four new digital signal processors (DSPs) powering 13 solutions targeting AI-scale networking, with claims of up to 70% reduction in total cost of ownership. The company is increasing investment in optical manufacturing capacity, including its indium phosphide facility in San Jose, to meet rising demand. Nokia now expects Network Infrastructure revenue to grow 12–14% in 2026, with Optical and IP Networks combined growing 18–20%, reflecting a stronger outlook tied to the AI infrastructure cycle.
- Total net sales: €4.5 billion (+4% YoY, constant currency)
- AI & Cloud revenue: €350 million (+49% YoY), ~8% of total sales
- AI & Cloud orders: €1 billion in Q1
- Network Infrastructure revenue: €1.83 billion (+6% YoY)
- Optical Networks revenue: €821 million (+20% YoY)
- IP Networks revenue: €626 million (+3% YoY)
- Fixed Networks revenue: €383 million (–13% YoY)
- Comparable gross margin: 45.5% (+320 bps YoY)
- Comparable operating margin: 6.2% (+200 bps YoY)
- Free cash flow: €629 million
“We delivered a solid start to the year, with net sales growing 4%, gross margin expanding 320bps and operating margin expanding 200bps in the first quarter. Demand continued to be strong, particularly in AI & Cloud, where net sales grew 49% and now account for 8% of group sales. We also booked EUR 1 billion of orders from AI & Cloud customers in the quarter.”
🌐 Analysis: Nokia’s Q1 results reinforce the growing importance of optical transport and IP networking in AI infrastructure, where bandwidth scaling and DCI architectures are becoming central to hyperscaler deployments.
🌐 Analysis: The acceleration in AI & Cloud demand and the upward revision of Network Infrastructure growth guidance suggest Nokia is gaining traction in non-telco markets, particularly hyperscale and enterprise AI clusters. This shift mirrors a broader industry transition as telecom vendors diversify toward data center and AI networking opportunities to offset slower carrier spending cycles.
