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NOK Rides on Strength of Network Infrastructure: Will the Gain Last?
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Key Takeaways
Nokia's Network Infrastructure sales rose to 2.04 billion euro, fueled by strong AI & Cloud demand.
AI & Cloud sales surged 105%, while Optical Networks and IP Network revenues grew 20% and 16%, respectively.
Nokia is expanding optical capacity as telecom modernization adds another growth driver.
Nokia Corporation (NOK - Free Report) is benefiting from solid revenue growth in the Network Infrastructure segment. During the second quarter, net sales from Network Infrastructure totaled €2.04 billion ($2.37 billion), increasing from €1.83 billion in the year-ago quarter. There are multiple factors driving this growth.
The rapid expansion of AI infrastructure has substantially increased the need for high-capacity connectivity. Nokia, with its robust Optical Network and IP network portfolio, is capitalizing on this emerging trend. In the second quarter, AI & Cloud net sales increased 105% year over year, while AI & Cloud order intake reached 2.8 billion euros.
During the second quarter, Optical Networks revenues grew 20% year over year on a constant currency (cc) basis, while IP Network grew 16% on a cc basis, backed by growing AI infrastructure spending. Nokia is actively expanding its optical manufacturing capacity to support the growing demand. Its new San Jose facility is expected to scale production in the fourth quarter of 2026. The Pennsylvania advanced test and packaging capacity is being increased 10x. These capacity expansions will help the company support expanding demand in the next several years.
Telecom network modernization remains a secondary growth driver. Telecom networks are also extending and enhancing their network to support high-bandwidth applications and AI workloads. This is also expected to remain a growth driver for upcoming quarters. Weakness in the Fixed networks business remains a drag on this segment’s net sales growth. Lower sales of consumer-premise fiber products are impacting revenues.
How are Competitors Faring?
Nokia faces competition from Ciena Corporation (CIEN - Free Report) and Arista Networks, Inc. (ANET - Free Report) in the Network Infrastructure segment. Ciena is witnessing solid demand trends as AI applications drive higher network traffic and bandwidth consumption across cloud and service provider environments. The company’s Optical Networking revenues increased to $1.10 billion from $773.6 million a year ago in the second quarter of 2026.
The company offers high-capacity optical transport, coherent optics and data-center interconnect solutions. This helps cloud providers and network operators handle rapidly increasing bandwidth requirements. Ciena is also targeting AI infrastructure with higher-capacity optical technologies, putting it in direct competition with Nokia.
Arista Networks competes with Nokia primarily in IP and data-center networking. The company boasts a strong presence in high-speed Ethernet switching and routing. This gives Arista exposure to the rapid expansion of AI data centers. During the second quarter of 2026, the company exceeded 100 cumulative AI fabric customers using Etherlink switches compared with only a handful of early adopters in 2024. Management also expects AI revenues to reach at least $3.6 billion in 2026, supported by scale-up, scale-out and scale-across deployments.
NOK’s Price Performance, Valuation & Estimates
Nokia shares have soared 153.2% over the past year compared with the industry’s 38.2% growth.
Image Source: Zacks Investment Research
From a valuation standpoint, Nokia trades at a forward price-to-sales ratio of 2.47, below the industry tally of 5.06.
Image Source: Zacks Investment Research
Earnings estimates for 2026 have declined 2.5% to 39 cents over the past 60 days, while those for 2027 have increased 2.04% to 50 cents.
View the Zacks #1 Rank List
Image: Bigstock
NOK Rides on Strength of Network Infrastructure: Will the Gain Last?
Key Takeaways
Nokia Corporation (NOK - Free Report) is benefiting from solid revenue growth in the Network Infrastructure segment. During the second quarter, net sales from Network Infrastructure totaled €2.04 billion ($2.37 billion), increasing from €1.83 billion in the year-ago quarter. There are multiple factors driving this growth.
The rapid expansion of AI infrastructure has substantially increased the need for high-capacity connectivity. Nokia, with its robust Optical Network and IP network portfolio, is capitalizing on this emerging trend. In the second quarter, AI & Cloud net sales increased 105% year over year, while AI & Cloud order intake reached 2.8 billion euros.
During the second quarter, Optical Networks revenues grew 20% year over year on a constant currency (cc) basis, while IP Network grew 16% on a cc basis, backed by growing AI infrastructure spending. Nokia is actively expanding its optical manufacturing capacity to support the growing demand. Its new San Jose facility is expected to scale production in the fourth quarter of 2026. The Pennsylvania advanced test and packaging capacity is being increased 10x. These capacity expansions will help the company support expanding demand in the next several years.
Telecom network modernization remains a secondary growth driver. Telecom networks are also extending and enhancing their network to support high-bandwidth applications and AI workloads. This is also expected to remain a growth driver for upcoming quarters.
Weakness in the Fixed networks business remains a drag on this segment’s net sales growth. Lower sales of consumer-premise fiber products are impacting revenues.
How are Competitors Faring?
Nokia faces competition from Ciena Corporation (CIEN - Free Report) and Arista Networks, Inc. (ANET - Free Report) in the Network Infrastructure segment. Ciena is witnessing solid demand trends as AI applications drive higher network traffic and bandwidth consumption across cloud and service provider environments. The company’s Optical Networking revenues increased to $1.10 billion from $773.6 million a year ago in the second quarter of 2026.
The company offers high-capacity optical transport, coherent optics and data-center interconnect solutions. This helps cloud providers and network operators handle rapidly increasing bandwidth requirements. Ciena is also targeting AI infrastructure with higher-capacity optical technologies, putting it in direct competition with Nokia.
Arista Networks competes with Nokia primarily in IP and data-center networking. The company boasts a strong presence in high-speed Ethernet switching and routing. This gives Arista exposure to the rapid expansion of AI data centers. During the second quarter of 2026, the company exceeded 100 cumulative AI fabric customers using Etherlink switches compared with only a handful of early adopters in 2024. Management also expects AI revenues to reach at least $3.6 billion in 2026, supported by scale-up, scale-out and scale-across deployments.
NOK’s Price Performance, Valuation & Estimates
Nokia shares have soared 153.2% over the past year compared with the industry’s 38.2% growth.
Image Source: Zacks Investment Research
From a valuation standpoint, Nokia trades at a forward price-to-sales ratio of 2.47, below the industry tally of 5.06.
Image Source: Zacks Investment Research
Earnings estimates for 2026 have declined 2.5% to 39 cents over the past 60 days, while those for 2027 have increased 2.04% to 50 cents.
Image Source: Zacks Investment Research
Nokia currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.