Nokia reports €605M comparable operating profit and €1.5B in AI and cloud orders
The annual profit outlook is unchanged, while higher working capital needs and restructuring reduce expected cash conversion.
Julian Okafor
AI and cloud customers placed €1.5 billion in quarterly networking orders as equipment suppliers expanded to meet demand. Nokia Corporation HELNOKIA NYSENOK, the Finnish supplier of mobile, optical and internet networking equipment, reported Thursday comparable operating profit of €605 million.
That beat the €454 million average analyst estimate compiled by Bloomberg for the Oct. 22 results. Comparable operating profit rose 35 per cent from €448 million in the third quarter of 2025.
Nokia kept its 2026 comparable operating profit outlook at €2.1 billion to €2.6 billion, while lowering its cash conversion assumption to fund supply and restructuring. Reported operating profit for the September quarter fell 22 per cent to €196 million because restructuring and integration costs increased.
Helsinki shares fell 4.13 per cent to €7.89 at 2:01 p.m. EEST Thursday, according to HELNOKIA. The American depositary receipts closed Wednesday at US$9.25 at 4:04 p.m. EDT in New York, according to NYSENOK.
Cloud Customers Increase Networking Orders
Group sales reached €5.154 billion in the third quarter of 2026, up 10 per cent from a year earlier. Sales growth was 9 per cent after adjusting for currency and portfolio changes.
Net sales to AI and cloud customers increased 123 per cent in the September quarter, while order intake from those customers rose 118 per cent. These orders are bookings, separate from the revenue Nokia recognized during the quarter.
Network Infrastructure sales reached €2.158 billion in the third quarter of 2026, growing 15 per cent on a constant currency basis. IP Networks grew 43 per cent, while Optical Networks expanded 18 per cent on that basis.
"In AI & Cloud, net sales more than doubled year-over-year and we secured EUR 1.5 billion in new orders," Nokia chief executive Justin Hotard said in the Oct. 22 release.
Nokia expects its combined optical and IP networking businesses to grow 25 to 30 per cent in 2027. For 2026, Nokia assumes Network Infrastructure sales growth of 12 to 14 per cent on a constant currency and portfolio basis. It now expects the combined optical and IP businesses to grow somewhat above its previous assumption of 18 to 20 per cent.
Restructuring Charges Increase
Nokia's detailed Oct. 22 interim report raises expected restructuring and associated charges to €1.1 billion for 2026. Associated cash outflows are expected to reach €800 million to €900 million as the company accelerates changes to its operations and location strategy.
The 2026 free cash flow conversion assumption falls to 35 to 55 per cent of comparable operating profit. Nokia plans an additional €400 million of working capital investment during 2026 to secure supply and support the following year's growth.
Nokia's results page puts total cash and interest-bearing financial investments at €5.0 billion for the third quarter. The interim report's net cash and interest-bearing financial investments measure was €2.584 billion, down 14 per cent from a year earlier.
Capital expenditure is expected to reach €750 million to €850 million in 2026. Some manufacturing investment payments move into 2027, but Nokia says its optical manufacturing expansion remains on track.
Equipment Makers Face Higher Component Costs
Telefonaktiebolaget LM Ericsson STOERIC-B NASDAQERIC, the Swedish mobile-network equipment supplier, reported Oct. 15 organic sales growth of 7 per cent. Ericsson chief executive Per Narvinger said component costs would weigh on gross margin in 2027 and described the radio access network market as flat.
Nokia's Mobile Infrastructure segment reported €2.902 billion of third-quarter 2026 sales, up 5 per cent. The release says part of that growth came from revenue accelerated from the fourth quarter into the third, alongside product mix and cost reductions that supported profitability.
Super Micro Computer, Inc. NASDAQSMCI, the San Jose supplier of servers and data-centre systems, raised its September-quarter revenue estimate on Oct. 20. Its new range is US$18.5 billion to US$19.5 billion, primarily because of increased AI-platform demand.
Mugglehead's coverage of that preliminary upgrade detailed a gross-margin estimate of 12 to 12.5 per cent, with final results due Nov. 3. Supermicro's estimate remains subject to its financial closing procedures.
Read more: Super Micro Computer raises sales estimate to US$18.5B to US$19.5B
For Nokia, the December quarter carries an assumption of 20 to 24 per cent sequential sales growth and a strong increase in comparable operating profit. Management expects annual comparable operating profit above the midpoint of its existing range.
Nokia also targets completion of its acquired optical-business integration by the end of 2026, with €200 million in net synergies. That year-end milestone will test the cost savings accompanying its forecast for faster optical and IP growth.
