Nokia Oyj shares climbed to their highest level in 16 years on Thursday, following a first-quarter earnings report that smashed analyst expectations. The Finnish telecommunications equipment maker posted a 54% jump in comparable operating profit to €281 million, comfortably exceeding the €250 million consensus forecast from analysts surveyed by Infront.
The company's comparable net sales reached €4.5 billion, roughly in line with market estimates, while the comparable gross margin expanded by 320 basis points to 45.5%. On a constant currency basis and adjusted for portfolio changes, comparable net sales rose 4% year-over-year.
Nokia's stock closed regular Helsinki trading at €9.05, up 6.35%, after hitting an intraday peak of €9.52—a price level not seen since the company's handset era in April 2010.
AI and Cloud Demand Drives Growth
The standout performance came from Nokia's AI and cloud customer segment, where sales surged 49% year-over-year, now accounting for 8% of group revenue. The company secured €1 billion in fresh orders from hyperscale cloud providers and data center operators during the quarter.
CEO Justin Hotard emphasized that the AI data center boom is not limited to U.S. chipmakers. "Hyperscalers depend on high-speed fiber, optical transport, and IP networks to move massive data volumes," he said. Nokia is now betting on stronger growth in its Optical Networks and IP Networks units, with a sharper focus on this customer base.
Raised Outlook, Steady Profit Target
Nokia raised its 2026 growth outlook for Network Infrastructure, now expecting sales growth of 12% to 14%, up from the previous guidance of 6% to 8%. The company also revised its addressable AI and cloud market forecast, projecting a compound annual growth rate of 27% from 2025 to 2028—a significant upgrade from the 16% rate forecast in November.
However, Nokia maintained its full-year comparable operating profit forecast of €2.0 billion to €2.5 billion. Hotard noted the company is running "somewhat above" the midpoint, citing robust demand in Optical Networks and IP Networks.
Shareholder Payout and Industry Divergence
Nokia's board approved a dividend of €0.04 per share, with a record date of April 28 and payment scheduled for May 7.
The stock surge highlights a growing divergence within the telecom equipment sector. Nordic rival Ericsson fell short of first-quarter core profit forecasts last week, as AI-fueled demand drove chip expenses higher and North American sales lost momentum. Not every supplier is benefiting equally from the AI wave.
Execution Risks and Competitive Pressures
Management flagged that free cash flow conversion depends on customer payment timing, regional demand trends, and capital expenditure patterns. Ongoing fierce competition remains a headache, and slow AI order conversion or aggressive pricing from rivals could quickly erode investor enthusiasm after the stock's sharp rally.
Hotard also raised a broader concern: Europe's shortage of AI data center capacity and funding. He warned that unless the region ramps up connectivity and builds out its data center infrastructure quickly, developers and companies may shift their focus to the U.S. or China.
