Nokia said that demand for its AI and cloud services has driven sales higher in the second quarter of the year but restructuring changes have cut into its earnings.

In Q2, the telecoms giant said its AI and cloud order intake was €2.8 billion (US$3.2 billion) and sales more than doubled year-on-year. President and CEO Justin Hotard said in a statement that demand for the business remains strong, crediting supply shortages across the wider industry to prompt its customers to place longer-term orders.

“The strength was broad-based, as we secured long-term orders in both Optical Networks and IP Networks,” Hotard said. “Q2 demonstrates our strategy is delivering results. Since we set out our plan late last year, Team Nokia has focused on maximising our opportunity in the AI supercycle.”

He added: “I am encouraged by the execution and progress we have made in a short period of time. We enter the second half with momentum and remain on track to deliver somewhat above the midpoint of our comparable operating profit guidance.”

Sales in the second quarter have risen by 8% to €4.8 billion ($5.47 billion), Nokia said, with net sales to AI and cloud customers growing by 105%. However, the reported operating margin declines 430bps to (1.0)%, the telco added, crediting a faster pace of restructuring.

Nokia first initiated its restructuring programme in 2023 and, by the end of 2026, expects €250 million of restructuring changes in 2026 related to the end of the programme.  These efforts involved simplifying Nokia’s operating structure in China, integrating the operations into its global operating model. It is also simplifying its operating model in Europe and allocating resources towards growth opportunities.

The company shows no signs of slowing down, having last week launched a commercial AI-RAN platform, the first of its kind, to help customers unlock more from their networks – including more than 100% spectral efficiency gains by 2028.

Hotard said these benefits will be “tangible” in 5G networks, providing a software upgrade path to 6G.

“This innovation is one example of how we unlock value for our customers and generate returns for our shareholders,” he explained. “As AI evolves, trusted connectivity becomes even more critical and we are delivering market-leading innovation that helps customers differentiate and capture value in this new era.”

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