Nokia said on 22 October 2026 that its net sales to AI & Cloud customers grew 123% in the third quarter on a constant currency basis, to EUR 631 million from EUR 279 million a year earlier, in its interim report. Chief executive Justin Hotard said the company “secured EUR 1.5 billion in new orders” in AI & Cloud in the quarter. At the European Central Bank reference rate of 1.1234 dollars per euro on 21 October 2026, that is about $709 million of sales and $1.69 billion of orders (our conversion).
AI & Cloud is how Nokia groups the hyperscalers and AI infrastructure builders that buy its optical and IP networking gear, the equipment that moves data between and inside data centres.
Business Pill · BACKLOG
A short explainer on backlog: orders taken but not yet delivered. It teaches the general idea only and says nothing about any company in this story.
The key insight: As we read it, the quarter shows where AI money reaches a network supplier: sales to AI & Cloud customers grew 123% at constant currency to about 12.2% of Nokia’s sales (our arithmetic), while its largest customer group, telecommunication providers, was flat at constant currency.
Group net sales were EUR 5,154 million, up 10% as reported and 9% at constant currency. Comparable operating margin rose 220 basis points to 11.7%, while reported operating margin fell to 3.8% from 5.4%, which Nokia puts down to “accelerated restructuring and integration cost.”
Network Infrastructure net sales grew 15% at constant currency to EUR 2,158 million, led by IP Networks, up 43%, and Optical Networks, up 18%, according to the release. Mobile Infrastructure net sales grew 5%, “in part due to acceleration of revenue from Q4 into Q3.”
AI & Cloud made up about 12.2% of group net sales in the quarter, against about 5.9% a year earlier (our arithmetic from Nokia’s customer-type table). In the first nine months of 2026, Nokia sold EUR 1,425 million to AI & Cloud customers, against EUR 680 million in the same period of 2025.
Nokia’s net sales to AI & Cloud customers in each quarter of 2025 and 2026 so far, as reported in its Q1, Q2 and Q3 2026 interim reports.
Nokia’s net sales to AI & Cloud customers in the third quarter of 2026 against a year earlier, from the customer-type table in its interim report. The 123% growth is Nokia’s constant currency figure.
Where the AI Demand Shows Up
The full report says IP Networks sales were “led by AI & Cloud” and that order intake “remained strong in IP Networks especially from AI & Cloud customers.” Optical Networks growth reflected “strong growth in AI & Cloud”, according to the same report.
The AI orders have run at EUR 1 billion in the first quarter, EUR 2.8 billion in the second and EUR 1.5 billion in the third, according to Nokia’s three interim reports this year, about EUR 5.3 billion in nine months (our arithmetic). In July, describing the EUR 2.8 billion of second-quarter orders, Nokia’s report said it expected “around half of these orders to convert to revenue over the next twelve months.”
Hotard also said: “We expect our combined Optical and IP Networks businesses to grow between 25% and 30% in 2027.” He named a customer link: “Our partnership with Google in support of their EUR 13 billion investment in Finland is an example of how our optical and IP networks provide the critical connectivity AI infrastructure requires.”
In Network Infrastructure, the report says gross margin declined “due to product mix and a ramp-up of new products for AI & Cloud customers in IP Networks.”
Cash and the Outlook
Nokia kept its full-year comparable operating profit outlook of EUR 2.1 billion to EUR 2.6 billion. It lowered its capital expenditure assumption to EUR 750 to 850 million, from EUR 800 to 900 million in July, saying “Nokia’s optical manufacturing expansion plans remain on-track, this only relates to timing of some cash payments.”
It also cut its assumption for free cash flow conversion to 35% to 55%, from 55% to 75% in July. The release says Nokia is investing in working capital “to secure supply and support the growthopportunity in 2027” and “is now planning to invest an additional EUR 400 million in working capital this year.”
Connecting the Coverage
On 21 October our AI-RAN piece reported Nvidia’s statement that T-Mobile completed “the world’s first AI-RAN call on a commercial network.” In this report Hotard says Nokia, “Together with T-Mobile and NVIDIA”, completed “the world’s first AI-RAN call in a live operator network.”
The same day, our Lam piece reported that Lam Research’s revenue rose 54% to $8.22 billion, with chief executive Tim Archer citing AI driving higher semiconductor demand. And our Micron piece reported Micron’s slide putting AI context length growth at 30x a year.
The Structural Read
As we read it, the orders run ahead of the sales: Nokia booked EUR 1.5 billion of AI & Cloud orders in the quarter against EUR 631 million of AI & Cloud sales, after EUR 2.8 billion of orders in the second quarter.
As we read it, the growth is coming through the data-centre networking lines: the report says IP Networks sales were “led by AI & Cloud”, and IP Networks grew 43% at constant currency.
As we read it, Nokia is spending cash now to be able to ship later: it lowered its free cash flow conversion assumption to 35% to 55% and plans an additional EUR 400 million of working capital “to secure supply and support the growthopportunity in 2027.”
Justin Hotard, Nokia President and CEO, 22 October 2026
“In AI & Cloud, net sales more than doubled year-over-year and we secured EUR 1.5 billion in new orders.”
Three Implications
FOR NOKIA SHAREHOLDERS Nokia kept its EUR 2.1 billion to EUR 2.6 billion comparable operating profit outlook but lowered its cash conversion assumption; as we read it, the trade-off it describes is cash this year for supply in 2027.
FOR AI DATA-CENTRE BUILDERS Hotard names a Google partnership supporting Google’s EUR 13 billion investment in Finland; as we read it, network gear is now a line item that hyperscalers secure through long-term orders, which Nokia says customers are placing because supply is the constraint.
FOR TELECOM OPERATORS Sales to telecommunication providers, still most of Nokia’s revenue at EUR 3,640 million, were flat at constant currency; Nokia’s AI-RAN work with T-Mobile and Nvidia is where it says the AI market reaches mobile networks.
The framework says the May 2026 Map of AI argued that “the seven-layer AI stack is now governed from the bottom”, naming energy, silicon and compute capacity.
As we read it, Nokia’s quarter shows that spending reaching the networking layer that links that compute: its AI & Cloud sales more than doubled. The framework was published in May 2026 and does not discuss Nokia.
What Is Not Established
Nokia does not name its AI & Cloud customers in the report, beyond the Google partnership in Finland, and does not split the EUR 1.5 billion of orders between Optical and IP Networks. The 2027 growth figure is Nokia’s expectation, not a result.
Comments from the analyst webcast, scheduled for 22 October at 3.00 p.m. Finnish time, are not in this version. We did not contact Nokia.
This Week In The AI Supercycle
Execution Fault Lines, Concentrated Demand, and Geopolitical Firewalls
This piece is part of this week’s issue: the AI build is not short of demand for its parts. It is short of cheap money, and its end revenue rests on a narrow base of large, often venture-funded buyers.
Nokia’s sales to AI & Cloud customers grew 123% at constant currency in the third quarter of 2026, to EUR 631 million or about 12.2% of the group (our arithmetic), and it booked EUR 1.5 billion of new AI & Cloud orders. It also lowered its cash conversion assumption as it puts an extra EUR 400 million into working capital “to secure supply and support the growthopportunity in 2027.”
A note on sourcing. Nokia’s figures and quotations come from its Interim Report for Q3 2026, published on 22 October 2026 as a stock exchange release and as a full PDF report, and from its Q1 and Q2 2026 reports. Dollar figures are our conversions at the European Central Bank reference rate of 1.1234 dollars per euro on 21 October 2026. Figures and comparisons marked as ours are ours. We did not contact Nokia. Nothing here is financial or investment advice.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
