Key Takeaways
- Q1 comparable operating profit surged 54% year-over-year to €281 million, exceeding analyst forecasts of €250 million
- The company returned to profitability with net profit of €87 million, compared to a €60 million loss in the prior-year quarter
- Revenue from AI and cloud clients jumped 49%, generating approximately €1 billion in fresh orders
- The company increased its AI and cloud addressable market growth projection to 27% per year from a previous 16% estimate
- Shares reached their highest level since April 2010, surging up to 9% during early market activity
Nokia delivered a first-quarter performance that significantly exceeded Wall Street’s projections, sending shares sharply higher. The telecommunications equipment manufacturer from Finland reported comparable operating profit of €281 million, representing a 54% year-over-year increase and surpassing the €250 million consensus among analysts.
The company achieved a net profit of €87 million, a dramatic turnaround from the €60 million deficit recorded in the comparable quarter last year. The operating margin expanded to 6.2%, a notable improvement from the 4.2% margin posted twelve months earlier.
Shares climbed as much as 9% during Thursday’s early trading session in Helsinki, marking the stock’s highest valuation since April 2010.
Comparable net sales for the three-month period totaled €4.5 billion, closely matching market projections and representing a 4% increase on a constant currency basis compared to the same period last year.
The AI and cloud segment emerged as the clear performance leader. Revenue from this division skyrocketed 49% and now represents 8% of total group sales. Fresh contracts from AI and cloud clients reached approximately €1 billion during the quarter.
The Optical Networks division, which operates under the Network Infrastructure umbrella, delivered exceptional results with 20% organic expansion. The overall Network Infrastructure segment posted 6% organic growth, while Mobile Infrastructure advanced 3%.
Company Dramatically Increases AI Market Projections
Nokia significantly elevated its total addressable market growth projection for AI and cloud operations to a 27% compound annual growth rate spanning 2025 through 2028. This represents a substantial upgrade from the 16% forecast presented during a November investor presentation.
The projected growth rate for the Network Infrastructure total addressable market was boosted to 12–14%, up from an earlier 6–8% estimate. Optical and IP network projections were similarly revised upward to 18–20% from the previous 10–12% forecast.
Chief Executive Justin Hotard attributed the revision to an AI “supercycle,” noting that demand continues to accelerate and is driving heightened capital deployment in optical and IP network infrastructure.
The company maintained its full-year comparable operating profit guidance range of €2.0 billion to €2.5 billion, indicating performance is currently tracking slightly above the range’s midpoint.
Q2 Outlook Introduces Some Uncertainty
Despite the strong quarter, not all indicators pointed upward. Nokia’s second-quarter operating profit forecast fell considerably short of analyst expectations.
Management projected Q2 operating profit at 12–16% of the full-year operating profit target, suggesting a figure approximately 20% below consensus at the midpoint of that range.
Cash generation also weakened, with free cash flow turning negative at €-353 million, contrasting with the positive €629 million recorded in the fourth quarter of 2025.
Barclays maintains an “underweight” rating on Nokia with a €5.20 price objective, characterizing the quarterly results as “broadly neutral.” The investment bank highlighted near-term concerns stemming from the disappointing Q2 profit outlook while recognizing Nokia’s expanding presence in AI applications.
Analysts at the firm noted that AI RAN testing programs remain on schedule but observed “little to get excited about on the mobile side.”
However, the Q2 revenue forecast did suggest potential upside relative to consensus, with management projecting 5–9% sequential revenue growth.
Nokia’s optical division has become a crucial growth engine following its purchase of California-based Infinera, a transaction that positioned the company among the global leaders in optical transport system manufacturing.
The company reaffirmed that AI and cloud orders during the quarter reached approximately €1 billion.
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