Nokia Q2 Operating Profit Surge Beats Estimates as AI Data Center Demand Doubles Cloud Sales

Finnish telecommunications equipment maker Nokia reported stronger-than-expected second-quarter financial results, driven by an accelerating “AI supercycle” and massive demand for optical networking gear from hyperscale data center operators.

In light of the strong operational execution and order momentum, the company raised its full-year comparable operating profit outlook to between €2.1 billion and €2.6 billion (up from €2.0 billion–€2.5 billion), instilling confidence across European tech markets.

1. Key Earnings Highlights: Q2 2026 vs. Q2 2025

• Comparable Operating Profit: Rose 18% year-over-year to €434 million ($496 million), handily beating the LSEG analyst consensus estimate of €382 million.

• Net Sales: Rose 8% as reported (9% at constant currency) to €4.82 billion, exceeding Wall Street projections.

• Operating Margins: Comparable operating margin expanded by 70 basis points to 9.0%.

• Dividend: Maintained a quarterly dividend payment of €0.04 per share.

Note on Reported Earnings: On a reported basis, Nokia posted a net profit of just €5 million and an operating loss of €50 million, heavily impacted by €390 million in accelerated restructuring charges during the quarter.

2. AI & Cloud Demand Outpaces Sector Headwinds

The core catalyst behind Nokia’s earnings beat was its Network Infrastructure division—particularly optical networking and IP routing solutions used to wire large-scale artificial intelligence clusters.

• 105% Sales Surge: Sales to AI and cloud customers more than doubled year-over-year to €446 million.

• Massive Backlog: Nokia booked €2.8 billion in new AI and cloud orders during Q2 alone (nearly triple the €1.0 billion booked in Q1). CEO Justin Hotard noted that about half of these new orders are expected to convert into revenue over the next 12 months.

• Segment Breakdown: Network Infrastructure net sales grew 12% at constant currency, led by a 20% jump in Optical Networks and a 16% rise in IP Networks.

3. Navigating Component Inflation and Rival Warnings

Nokia’s upbeat report helped soothe broader tech investor anxiety caused by Swedish rival Ericsson, which had warned that soaring memory chip costs (driven by AI demand) were squeezing equipment margins.

While Nokia acknowledged that rising memory chip prices and supply-chain bottlenecks remain industry-wide constraints, management highlighted that robust demand and long-term customer purchasing commitments are enabling the company to absorb cost pressures far better than peers.