Nokia Oyj reported first‑quarter 2026 results that showed net sales of EUR 4.5 billion (US$5.26 billion), a 4% increase on a constant‑currency and portfolio basis, and a comparable diluted earnings per share of EUR 0.05 (US$0.0586). The company’s comparable operating margin expanded to 6.2%, up 200 basis points from the 3.6% margin reported in Q1 2025, while the reported operating margin rose to 1.4% from 0.5% in the prior quarter. AI‑and‑cloud sales grew 49% year‑over‑year, representing 8% of total group sales and driving the earnings beat.
The quarter’s growth was underpinned by a 6% rise in Network Infrastructure sales, a 20% jump in Optical Networks driven by AI and cloud demand, and a 3% increase in Mobile Infrastructure. Core Software and Technology Standards segments posted 5% and 10% gains, respectively, reflecting a favorable product mix and pricing power in high‑margin areas.
Operating margin expansion was largely a result of cost controls and a shift toward higher‑margin AI‑cloud and optical contracts. The comparable margin increase from 3.6% to 6.2% indicates that Nokia’s strategic focus on AI‑driven infrastructure is translating into higher profitability, while the reported margin rise to 1.4% shows that the company is still managing operating costs effectively as it scales new business lines.
Management reiterated its 2026 operating‑profit outlook of EUR 2.0 billion to EUR 2.5 billion and confirmed a constant‑currency sales growth target of 12%–14% for Network Infrastructure. It also raised its AI‑cloud addressable‑market CAGR to 27% versus the previously forecast 16%, signaling confidence in sustained demand from hyperscalers and enterprise customers. "We are increasing our growth assumption for Optical and IP Networks and we are investing to capture accelerating demand from AI & Cloud customers," said President and CEO Justin Hotard.
The results also highlighted a free cash flow of EUR 629 million, underscoring Nokia’s ability to generate cash while investing in high‑growth segments. The company’s EPS beat analysts’ consensus by roughly $0.014 per share, a margin that reflects disciplined cost management amid a 4% revenue increase that was offset by a 3% decline in net sales in Q1 2025. Headwinds such as semiconductor supply constraints remain, but the company’s focus on AI‑cloud and optical networking positions it to capture a growing share of the high‑bandwidth market.
"Our first quarter gave us a solid start to 2026. Net sales grew 4% to EUR 4.5 billion, with an operating margin of 6.2%, and we delivered a free cash flow of EUR 629 million in the quarter," Hotard added. "We now expect our AI and cloud addressable market to grow at a 27% CAGR between 2025 and 2028, up from the 16% we shared in November." The CEO also noted that the industry is scaling from hundreds to thousands of fibers between data centers, highlighting the scale of infrastructure investment required to support AI workloads.
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