Nokia raised growth targets for its AI business on Thursday, after surpassing quarterly expectations and sending its shares soaring to the highest level in 16 years.
The company has seen net sales grow 4% at the start of the year, with demand continuing to be strong in AI and cloud, where net sales grew by 49%. The company booked €1 billion (US$1.16 billion) orders from AI and cloud customers just in this quarter, thanks to high demand for AI data centres being built by hyperscalers that rely on fibre optic cables to accelerate.
This comes as Nokia is undergoing a significant transition towards AI infrastructure. Having been well-known for its phone business and 5G tools, the company has prioritised its AI and cloud market. Notably, this was achieved by acquiring Infinera to boost its optical transport business to power the data centre revolution – and by appointing AI and data centre veteran Justin Hotard as CEO in April last year.
“Across the supply chain, demand is accelerating and lead times are extending, reflecting the scale of investment underway,” Hotard said in a statement. “At our Capital Markets Day in November, we outlined our view of the AI supercycle and the market opportunity for Nokia. Since then, demand has accelerated significantly.”
Nokia now expects the addressable market in AI and cloud to grow by 27% from 2025 and 2028, compared to its November estimate of 16%.
The company saw network infrastructure net sales grow by 6%, optical networks grow 20% and 3% growth for its IP Networks net sales, which Hotard said reflected a shift towards higher-margin products.
“We are seeing good traction in IP Networks, with pipeline growth driven by new design wins and deeper penetration into AI and cloud use cases inside the data centre,” he said. “We are making progress on AI-RAN and are on track to launch customer trials later this year.”
He added: “As a result, we are currently tracking somewhat above the mid-point of our full year financial outlook of €2 billion to €2.5 billion ($2.33-2.92 billion) in comparable operating profit.”
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