Nokia Oyj (NOK) shares plunged 14.97% to $7.86 on Thursday, even as the Finnish company reported rising revenue and stronger demand for artificial intelligence networks. Nokia posted sharp growth in its IP Networks business alongside higher demand from cloud customers, but restructuring charges weighed on reported profitability, and the company maintained its full-year 2026 financial outlook. The quarter captured a tension running through Nokia's results: accelerating orders tied to AI infrastructure buildouts on one side, and integration and restructuring costs still visible in reported figures on the other.

Network Infrastructure Leads Quarterly Sales Growth

Nokia generated EUR 5.15 billion in third-quarter revenue, an increase of 10% from a year earlier. Adjusted for currency movements, sales grew 9%, supported by stronger network infrastructure activity. The company recorded more orders from customers building networks for computing facilities.

Network Infrastructure revenue reached EUR 2.16 billion, representing 15% growth at constant exchange rates. Within that segment, IP Networks grew 43%, while Optical Networks increased 18% over the year. These products carry data between servers, facilities and other network components — the transport layer that AI data center buildouts depend on as cloud operators add capacity.

Mobile Infrastructure contributed EUR 2.90 billion in sales, up 5% from the year-ago quarter. The segment benefited from its product mix, spending controls and continued cost reductions, and some revenue originally expected in the fourth quarter shifted into the third quarter.

Restructuring Costs Pressure Reported Profitability

Nokia reported EUR 605 million in comparable operating profit, up 35% from the prior year, with the comparable operating margin improving to 11.7% from 9.5% one year earlier. Revenue growth and tighter operating expenses helped support that improvement.

Reported operating profit, however, fell 22% to EUR 196 million as restructuring and integration expenses increased. The reported operating margin slipped to 3.8%, while reported gross margin decreased to 42.2%. Comparable gross margin remained largely stable at 44.6%. The two profit lines diverge because Nokia's comparable measures strip out restructuring and integration charges, a distinction that explains how adjusted profit could climb 35% even as the reported figure declined.

Comparable diluted earnings reached EUR 0.09 per share, compared with EUR 0.06 previously. Reported diluted earnings from continuing operations stood at EUR 0.03 per share. Despite the weaker reported operating result, quarterly net profit increased to EUR 156 million.

AI Orders Support Growth Plans

Sales to AI and cloud customers surged 123%, while related order intake increased 118%. Nokia secured EUR 1.5 billion in new quarterly orders from these customers, and its existing backlog also supports future demand for high-capacity network equipment. For an equipment vendor, that cadence of orders builds the backlog that underpins revenue in later quarters.

The company expects combined Optical and IP Networks growth of 25% to 30% in 2027. Nokia also plans to complete the integration of its acquisition of Infinera by year-end, one year ahead of schedule, with management projecting EUR 200 million in net synergies from the deal. Those milestones give readers concrete checkpoints in the quarters ahead: the year-end integration deadline, delivery against the EUR 200 million synergy projection, and progress toward the 2027 growth target.

Nokia is working with Google on connectivity linked to its EUR 13 billion investment in Finland. Separately, the company completed a live-network AI-RAN call with T-Mobile and NVIDIA. Taken together, the partnerships show Nokia anchoring its portfolio to AI infrastructure on both the fixed-network and mobile-network sides its business. Despite the steep decline in its share price, Nokia kept its full-year outlook unchanged.

Source: Blockonomi