Nokia AI revenue surges 49% as hyperscaler spending drives optical demand

Nokia's AI & Cloud revenue surged 49% in the first quarter, with ~€1 billion in orders booked as hyperscalers boosted optical network spending.

The company raised its AI & Cloud market compound annual growth rate estimate to 27% for 2025 through 2028, up from 16% previously, Nokia said in its earnings materials. The revision reflects accelerating demand from cloud providers building out AI infrastructure that requires high-speed optical interconnects.

The AI & Cloud business contributed 8% of total net sales in the quarter. The legacy telecom segment, which accounts for 73% of revenue, declined 2% year over year. Nokia incurred €156 million in restructuring charges during the period. The company's debt-to-capital ratio stood at 10.1%, with a current ratio of 1.57. Total revenue and EPS figures for the quarter were not yet disclosed.

Nokia competes with Arista Networks and Cisco Systems in the AI networking space. Arista, which raised its 2026 AI networking revenue target to $3.5 billion, has deployed more than 100 customer networks running 800G Ethernet. Nokia's optical networking focus differentiates its approach as it expands manufacturing capacity to meet growing demand. The company expects capital expenditures of €900 million to €1 billion in 2026 to support this expansion.

Optical networking has become a key battleground in AI infrastructure. Nvidia Chief Executive Officer Jensen Huang recently named Marvell Technology as a key beneficiary of optical demand, sending Marvell shares up 32% in a single session. Nokia's optical networking portfolio positions it to capture similar demand from hyperscaler data center buildouts.

In the broader telecom market, Nokia faces competition from Ericsson across mobile network infrastructure and 5G deployments. Ericsson holds a portfolio of 60,000 granted patents, and roughly 50% of the world's mobile 5G traffic runs on its radio networks, according to the company.

The global AI in networks market is projected to grow from $15.28 billion in 2025 to $192.42 billion in 2034, representing a compound annual growth rate of 32.51%, per Precedence Research. Nokia's raised CAGR estimate of 27% through 2028 sits below this broader market forecast, suggesting the company sees its addressable segment growing at a slightly slower but still rapid pace.

Consensus estimates call for 2026 sales growth of 7.44% and EPS growth of 21.21%. The stock has gained 168.7% over the past year and trades at 33.26 times forward earnings. Nokia's next earnings date is estimated for Aug. 19, 2026.

The raised outlook suggests management expects AI-driven demand to accelerate through 2028. Investors will watch the next quarterly report for updated segment margins and AI revenue contribution as a share of total sales.

This article is for informational purposes only and does not constitute investment advice.