Nokia’s Fiber Optic Bet Is Paying Off as AI Hunger Lifts Earnings

Nokia beat profit expectations in Q1 2026, and the reason has nothing to do with phones. The Finnish company’s optical fiber business has become the quiet engine behind its strongest quarter in years.

Comparable operating profit jumped 54% to €281 million, well above analyst estimates. Shares rose roughly 7% in Helsinki, reaching levels not seen since 2010. The company’s stock price is up by a staggering 63% in 2026.

The Fiber Behind the AI Boom

The headlines say “AI revived Nokia,” but the earnings tell a more specific story. Inside Nokia’s Network Infrastructure segment, the Optical Networks unit grew 20% in the quarter.

This single business line, which builds the high-speed fiber systems connecting AI data centers, delivered far more growth than any other part of the company.

The rest of the portfolio tells a different story. IP Networks grew 3%. Fixed Networks shrank 13%. The legacy mobile infrastructure business, once Nokia’s identity, managed just 3% growth.

What changed is who Nokia sells to. Cloud giants like Amazon, Google, and Microsoft are building massive AI training facilities, and those facilities need fiber optic cables to move data at scale.

Nokia booked €1 billion ($1.17B) in new orders from these hyperscaler customers in Q1 alone. Sales to AI and cloud buyers now account for 8% of the company’s total revenue, up 49% from a year ago.

A Bigger Bet on Optical

Nokia is leaning into the momentum. The company raised its 2026 growth forecast for Network Infrastructure to 12-14%, up from 6-8%.

It now expects the AI and cloud market it serves to grow at 27% annually through 2028, nearly double its November estimate.

“We are increasing our growth assumption for Optical and IP Networks and we are investing to capture accelerating demand from AI & Cloud customers,” stated Justin Hotard, President and CEO.

The Infinera acquisition, completed in early 2025, gave Nokia a larger footprint in coherent optical transport. That deal is now showing up in wider margins and stronger order books.

Nokia’s comeback is real. It just has less to do with AI hype and more to do with the fiber optic cables that make AI possible.

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