Nokia's July 23 results made the AI story harder to ignore: optical networks and cloud orders are now doing the work that 5G recovery stories never quite did.
Nokia didn't just get a better quarter. It got a cleaner identity. The Finnish company reported second-quarter revenue of €4.815 billion on July 23, up 8% from a year earlier, while comparable operating margin rose to 9.0%, according to Investing.com, citing the company's release. Network Infrastructure revenue grew 12% on a constant currency basis. Optical Networks grew 20%. Sales to AI and cloud service customers more than doubled. That is the story.
If you still think of Nokia as a legacy telecom supplier waiting for mobile operators to spend again, the numbers don't fit that frame. Nokia said AI and cloud customers placed €2.8 billion of orders in the second quarter, with about half expected to convert into revenue within 12 months. In the first quarter, Nokia had already booked €1 billion of orders from the same customer group, while AI and cloud net sales grew 49% and Optical Networks grew 20%, according to Nokia's own April interim report. This isn't a one-quarter flicker.
The reported line still carries some mess. Nokia's reported operating margin fell to minus 1.0% in Q2 because it accelerated restructuring charges and reclassified Fixed Wireless Access CPE and Enterprise Campus Edge as discontinued operations. Keep that in view. A company can have a real growth story and still be cleaning up old structure at the same time.
The AI buildout needs fiber
The reason Nokia is getting pulled into the AI trade is not mysterious. Google, Amazon, Microsoft, Meta, and Oracle are expected to spend more than $600 billion on infrastructure in 2026, with roughly 75% aimed at AI, according to Introl's April analysis of hyperscaler capital expenditure. You don't need every dollar of that to flow through Nokia for the opportunity to matter. You only need enough data centers to need more optical transport, more IP routing, and more capacity between GPU clusters.
That is where Nokia is better positioned than its old reputation suggests. Its Optical Networks business sells the high-speed fiber systems that move data across and between large facilities. Nvidia chips get the attention because they're expensive and visible. Fiber is quieter. But try running a hyperscale AI training cluster without moving data at extreme speed and the glamour disappears quickly.
Yahoo Finance made the same point after Nokia's first-quarter report, noting that the company's fiber optic business had become the engine behind its profit beat. 24/7 Wall St. went further in May, calling Nokia the AI networking stock few investors were watching, while comparing it with Cisco's much louder AI networking trade. The phrasing was sharp. The underlying distinction is useful, though: Cisco has owned more of the market conversation, while Nokia has been building a case in the order book.
The market has to reprice the story
Frankly, the hard part now is not proving that Nokia touches AI infrastructure. It plainly does. The harder question is whether investors should treat that exposure as a durable business shift or just another hot label attached to networking equipment. Nokia raised its full-year comparable operating profit outlook to €2.1 billion to €2.6 billion from €2.0 billion to €2.5 billion, though the company tied the change partly to discontinued operations rather than pure operating strength. That detail matters.
You should also watch the conversion of those €2.8 billion in Q2 AI and cloud orders. Orders are not revenue. They are a claim on future work, and hyperscaler deployment schedules can move around when power, chips, construction, and financing get tight. If roughly half converts within 12 months, Nokia has a stronger case that the AI customer base is becoming part of its normal revenue engine. If it slips, the market will notice.
Still, Nokia's old brand baggage is less useful by the quarter. The phone story is over. The networking story is not. What matters now is whether Optical Networks and IP Networks can keep growing while Nokia strips out lower-priority businesses and pays for restructuring. The orders are real. So is the risk. That is the real test after this Q2 report.
Also read: Intel and AMD are locking Chinese AI data centers into multi-year CPU deals as a 40% price surge signals a shortage nobody saw coming • OpenAI's own AI models broke out of a test sandbox and autonomously hacked Hugging Face • Hyundai's 35,000 striking workers just forced the first real test of who controls humanoid robots on the factory floor
