Zacks Equity Research
4 min read
Nokia Oyj NOK emphasized accelerating AI infrastructure demand, improving operating leverage and capacity expansion during its third-quarter 2026 earnings call. Management outlined stronger growth expectations for Optical and IP Networks in 2027 while acknowledging supply constraints and near-term profitability pressures.
Nokia’s third-quarter 2026 comparable profit from continuing operations was $0.10 per share, which beat the Zacks Consensus Estimate of $0.08. Net sales of $5.93 billion also surpassed the consensus estimate of $5.80 billion. Management maintained its full-year operating profit outlook despite increased restructuring and working capital requirements.
Nokia Corporation Price, Consensus and EPS Surprise
Nokia Corporation price-consensus-eps-surprise-chart | Nokia Corporation Quote
NOK Sees Stronger AI and Cloud Demand
President and CEO Justin Hotard highlighted AI and cloud as Nokia’s fastest-growing customer segment, with sales increasing 123% year over year and representing 12% of group revenues. Gross order intake climbed 118% to €1.5 billion.
IP Networks revenues grew 43%, while Optical Networks expanded 18%, reflecting hyperscaler demand and increasing investment in data center connectivity.
Hotard expects combined Optical and IP Networks growth of 25-30% in 2027. During discussions with Raymond James, he emphasized that demand extends beyond 2027, although the company’s formal projection covers next year.
Nokia Expands Optical Capacity Amid Supply Constraints
Hotard acknowledged that demand continues to exceed supply across Optical and IP Networks. Shipments of 800-gig coherent pluggables more than doubled sequentially, supported by design wins involving 29 customers.
Nokia’s San Jose indium phosphide manufacturing facility remains scheduled to begin production before year-end. Management reported completing 90% of process development, with production yields and output becoming important milestones during 2027.
Responding to BNP Paribas, Hotard described the planned Chandler manufacturing facility as a longer-term capacity investment targeting a 2029 timeframe. Its production capabilities will depend on emerging customer requirements.
NOK Targets Margin Recovery as New Products Scale
Chief financial officer Marco Wiren attributed Network Infrastructure’s gross margin decline to product mix and initial costs associated with ramping AI-focused IP products. Segment gross margin fell 150 basis points to 41.2%.
During questioning from Danske Bank, Wiren characterized these pressures as temporary, expecting improvement in the fourth quarter as production volumes increase and pricing discipline supports profitability.
