Nokia’s Optical Network Growth Increased by 20% in Q126

Nokia achieved a strong start in the first quarter of 2026, with revenue increasing by 4% year-on-year (calculated at constant exchange rates and adjusted for the investment portfolio), reaching 4.497 billion euros in Q1, a 2% year-on-year growth. Comparable gross margin expanded by 320 basis points to 45.5%, while comparable operating margin improved by 200 basis points to 6.2%. Net sales in the AI and cloud customer segment rose by 49% year-on-year, with AI and cloud orders reaching 1 billion euros during the quarter.

By business segment, revenue from network infrastructure services increased by 6% year-on-year, with optical networking up 20%, IP networking up 3%, and fixed networking down 13%. Mobile infrastructure services revenue rose 3%, driven by a 5% growth in core software, stable wireless networking, and a 10% increase in technical standards. Investment portfolio services revenue grew by 4%.

By region, revenue in the Americas grew by 3%, declined by 4% in the Asia-Pacific region, and increased by 9% in Europe, the Middle East, and Africa.

In terms of performance highlights, Nokia introduced a new generation of application-optimized optical network solutions at the OFC Optical Fiber Conference, including four new digital signal processors and 13 novel solutions, capable of reducing customers’ total cost of ownership by up to 70%. In the AI-RAN domain, there are already 10 publicly committed customers, with customer trials expected to commence later this year. Driven by strong demand, the company has raised its full-year revenue growth forecast for network infrastructure in 2026 to 12%-14%, with optical networks and IP networks combined expected to grow by 18%-20%.

Nokia President and CEO Justin Hotard stated that the AI supercycle is accelerating, with the company projecting an increase in the compound annual growth rate of the addressable market for AI and cloud from 16% to 27% between 2025 and 2028. The company is ramping up investments in optical networks to seize market opportunities, currently targeting a mid-range annual comparable operating profit of €2 billion to €2.5 billion.

Looking ahead, Nokia expects its revenue in the second quarter to grow by 5% to 9% quarter-on-quarter, with comparable operating profit accounting for 12% to 16% of the annual total. The company projects capital expenditures for the full year of 2026 to be between 900 million and 1 billion euros.