Nokia Q1 2026 Interim Report: Optical and AI Growth Drive Success
Nokia is no longer just the company that made your first mobile phone. Microsoft bought that consumer business over a decade ago. Today, in early 2026, Nokia has rebuilt itself into a major player in artificial intelligence, data centers, and semiconductors.
The company recently released its first quarter results for 2026, showing exactly how it plans to build the physical networks that make global AI possible. Three major moves got them here. They secured a landmark $1 billion investment from NVIDIA. They spent $2.5 billion to buy the optical network firm Infinera. They also built a complete business around advanced, light-based computer chips.
The NVIDIA Partnership
In late 2025, NVIDIA bought a 2.90 percent stake in Nokia. This was a highly active partnership. The two companies want to blend standard telecom networks with advanced computing. To do this, Nokia is placing NVIDIA’s ARC computing platform and Aerial software inside its base stations. This turns everyday cell towers into local AI data centers.
NVIDIA CEO Jensen Huang loves the dynamic between the two teams. He recently pointed out that Nokia understands telecommunications better than anyone else. Speaking to the media, Huang joked that he wished his company had invested $2 billion instead of $1 billion. He views this deal as a way for Western nations to reclaim the telecom industry. By replacing old hardware with smart, flexible systems, Nokia gives NVIDIA millions of new locations to process data right where people live and work.
Infinera and the Cloud
NVIDIA brings the brainpower, but AI also needs fast roads to travel. That is where Infinera comes in. Nokia finished buying the company in February 2025. The deal gave Nokia advanced optical chips and deep ties to giant tech companies like Microsoft, Amazon, and Google.
The current AI boom demands networks that move massive amounts of data instantly while saving power. Small upgrades to older technology will not work anymore. By combining Infinera’s tools with its own, Nokia now builds everything from tiny data center parts to massive cables that run under the ocean. This strategy is paying off quickly. In the first quarter of 2026, sales to AI and cloud clients jumped 49 percent. These customers now make up 8 percent of Nokia’s total sales.
Building Better Chips
A key part of Nokia’s success is its ability to make its own photonic chips. Very few Western rivals can do this. Thanks to the Infinera deal and an earlier purchase of a company called Elenion, Nokia now runs its own Indium Phosphide wafer factory in San Jose, California.
Indium Phosphide is a special material. It creates high-speed network parts that lose less data and use far less power than standard silicon. Making these components in-house protects Nokia from supply chain problems and speeds up new designs. One major success is the ICE-D line of data center optics. These products cut the power needed to send a single bit of data by up to 75 percent.
In March 2026, Nokia revealed new network solutions powered by four custom digital signal processors. These processors act like building blocks. Nokia can mix and match them to fit specific AI tasks, which drops customer costs by as much as 70 percent. David Heard, President of Network Infrastructure, noted that Nokia is connecting intelligence to deliver trusted solutions with the best economics and lowest power use.
Strong Financial Proof
Nokia’s first quarter numbers for 2026 show a company moving fast. CEO Justin Hotard took charge in early 2025. He reported that Nokia booked 1 billion euros in orders from AI and cloud customers in just three months.
Because demand is rising so quickly, Nokia raised its market predictions. The company now expects its AI and cloud market to grow by 27 percent each year through 2028. That is a massive jump from its older estimate of 16 percent. As a result, Nokia upgraded the 2026 growth forecast for its Network Infrastructure branch from 6 to 8 percent all the way up to 12 to 14 percent.
Hotard explained that the industry has reached a turning point. He said the company is increasing growth assumptions and investing heavily to meet demand. The financial markets noticed. Nokia posted a comparable operating profit of 281 million euros for the quarter. That is a 54 percent increase from the previous year, beating expert predictions by 11 percent.
A Secure Western Option
This transformation matters on a global scale. As the United States and Europe actively move away from Chinese network equipment, Nokia has stepped up as a secure, trusted Western option. With new investments in German microelectronics and its factory in California, Nokia holds a vital spot in the technology supply chain.
Jensen Huang highlighted this angle in a recent Bloomberg interview. He believes this partnership speeds up innovation. He stated that combining wireless telecom, AI, and accelerated computing will ultimately help America win the tech race.
The Road Ahead
The modern version of Nokia is no longer just about connecting calls. It is a distributed computing company. As the world moves toward 6G networks, the real money will come from processing data instantly at the edge of the network. NVIDIA’s equity stake guarantees its technology sits at the center of this new global system.
Nine of the top ten major tech giants already use Nokia’s optical equipment. This puts Nokia in a perfect spot to capture a huge piece of the AI infrastructure market, which experts say will top $200 billion by 2030. Nokia missed the boat at the end of the mobile phone era, but its new chapter looks incredibly strong. As Justin Hotard put it, Nokia changed the world once by connecting people, and it will do it again by connecting intelligence.
Disclaimer:
All views expressed are my own and are provided solely for informational and educational purposes. This is not investment, legal, tax, or accounting advice, nor a recommendation to buy or sell any security. While I aim for accuracy, I cannot guarantee completeness or timeliness of information. The strategies and securities discussed may not suit every investor; past performance does not predict future results, and all investments carry risk, including loss of principal.
I may hold, or have held, positions in any mentioned securities. Opinions herein are subject to change without notice. This material reflects my personal views and does not represent those of any employer or affiliated organization. Please conduct your own research and consult a licensed professional before making any investment decisions.