Inside Nokia’s Comeback: How AI and Cloud Partnerships Sparked Double-Digit Growth -( $NOK $SPY $NVDA )

By John F. Heerdink, Jr.

Nokia’s (NOK, $6.11, +37.85% YTD) latest earnings report suggests the Finnish telecom and technology company is undergoing one of its most compelling transformations in years—pivoting decisively toward AI infrastructure and cloud networking as new revenue engines drive growth and boost investor confidence.

Nokia’s Return to Growth Amid AI Surge

Nokia reported a 12% jump in net sales for the third quarter of 2025, reaching €4.83 billion, fueled by robust demand from AI and cloud service providers. While operating profit slipped 14% amid margin pressures, the company beat analyst expectations and reaffirmed its full-year outlook. Optical Networks, Nokia’s fastest-growing division, surged 19% during the quarter, reflecting surging global demand for high-capacity data transport as AI adoption accelerates.

The results prompted a 10% spike in Nokia’s stock, signaling renewed investor optimism that the company’s pivot to AI-driven infrastructure is gaining traction. CEO Justin Hotard described the quarter as “a validation of Nokia’s strategy to be at the center of the AI supercycle,” as cloud and artificial intelligence-related revenue now accounts for 6% of total sales and 14% of the Network Infrastructure segment.

Strategic Investments and Partnerships

Beyond earnings, Nokia announced a string of partnerships and investments aimed at solidifying its role in next-generation data and networking technologies. The company is opening a second semiconductor facility in San Jose next year to meet rising optical component demand, while also expanding collaboration with U.K.-based Nscale to supply networking equipment for global AI data center projects.

Another key partnership with Supermicro will deliver AI-optimized data center networking solutions, highlighting Nokia’s deepening integration into the AI infrastructure ecosystem. Combined with the earlier acquisition of Infinera and participation in Nscale’s Series B round, these moves position Nokia as a core equipment supplier to hyperscalers, telecoms, and emerging AI compute platforms.

Navigating Growth and Margin Pressures

Despite top-line momentum, Nokia faces profit margin compression, with its gross margin sliding 150 basis points to 43.7% as product mix and foreign exchange headwinds offset strength in cloud and network services. Analysts note that Nokia’s shift toward AI-intensive customers, while strategically critical, involves near-term cost and pricing trade-offs typical of large infrastructure transitions.

Still, the company maintained a solid €3 billion net cash balance and expects to hit its 2025 guidance, aided by growing licensing revenues from Nokia Technologies—whose unit sales rose 14% year over year.

Positioning for the “AI Supercycle”

As legacy telecom revenues stabilize and AI-related investments surge globally, Nokia appears to be evolving from a traditional network supplier into a next-generation digital infrastructure company. Its focus on optical networks, IP routing, and AI-optimized cloud technologies reflects a broader industry shift, where connectivity and compute are merging to support artificial intelligence deployment at scale.ceotodaymagazine+2

The Sum…

With plans to unveil a new strategic roadmap at its Capital Markets Day in November, Nokia is presenting itself not just as a telecoms player but as an enabler of the digital foundations powering the AI era—a transformation investors are beginning to reward.