Nokia reported a stronger-than-expected second-quarter comparable operating profit on Thursday, driven by surging demand from artificial intelligence and cloud customers. The Finnish telecom equipment maker also raised its full-year profit guidance, signaling confidence in sustained growth momentum.
Comparable operating profit reached €434 million ($496 million) for the three months ended June 30, an 18% increase year-over-year and above the average analyst estimate of €382 million, according to LSEG data. Comparable net sales came in at €4.82 billion, also exceeding market forecasts.
AI and Cloud Revenue Doubles
Net sales from AI and cloud customers doubled during the quarter to €446 million, underscoring the company's strategic pivot toward supplying fiber-optic equipment to large technology firms building AI data centers. Nokia booked €2.8 billion in new orders during the period, reflecting sustained demand for infrastructure supporting AI and cloud operations.
CEO Justin Hotard noted that demand remains robust while supply constraints persist across the industry. “Demand remains strong, while supply continues to be the main industry constraint, prompting our customers to place longer-term orders,” Hotard said in a statement.
Cost Pressures from Memory Chips
Despite the demand tailwinds, Nokia faces rising memory chip costs, a challenge exacerbated by the rapid expansion of AI. AI companies have been cornering the market for memory chips, pressuring margins for telecom equipment makers. Swedish rival Ericsson warned last week that rising memory chip costs were weighing on its results, contributing to a sharp decline in its shares.
Nokia's results suggest it is benefiting from the same AI-driven demand trend while navigating supply constraints and cost pressures affecting the broader sector.
Data Center Strategy Under Hotard
Since joining Nokia last year from Intel, where he led the Data Center & AI Group, Hotard has prioritized expanding the company's data center business. Nokia recently entered a billion-dollar deal with chipmaker Nvidia to strengthen its position in the data center market. The strategy has coincided with a sharp increase in revenue from AI and cloud customers, making this segment an increasingly important contributor to overall performance.
For context on broader AI infrastructure demand, see Dell Stock Jumps 9% as Super Micro's Record Orders Signal Sustained AI Demand and Alphabet Q2 Cloud Revenue Surges 82% to $24.77B, EPS Beats by Wide Margin.
Raised Full-Year Guidance
Nokia now expects full-year comparable operating profit to be between €2.1 billion and €2.6 billion, up from its previous range of €2.0 billion to €2.5 billion. The upgraded outlook reflects the stronger second-quarter performance and expectations for continued growth from AI and cloud customers.
While AI-related demand is creating new opportunities, rising memory chip costs remain a challenge for telecom equipment manufacturers. Nokia will continue to balance demand with supply constraints and cost pressures across the industry.
This article is for informational purposes only and does not constitute financial advice.
