Rising investment in artificial intelligence infrastructure is boosting Nokia’s business, with the Finnish technology company reporting better-than-expected operating profit for the 3rd quarter. Growing demand for data centre networking equipment has supported its efforts to expand beyond traditional telecommunications markets.
Nokia reported adjusted operating income of €605 million ($680 million) for the quarter, exceeding the average analyst estimate of €454 million compiled by Bloomberg. The company benefited from fulfilling part of its existing backlog of data centre equipment orders.
Chief Executive Officer Justin Hotard is working to make data centres a larger contributor to Nokia’s growth. The strategy comes as demand from traditional telecommunications customers remains subdued following a slow rollout of 5G networks.
Last year, Nokia introduced a strategy focused on capitalising on the growing demand for AI infrastructure, alongside a restructuring plan. The company has since sold several businesses as part of these changes. Nokia expects the strategy to support double-digit growth in operating profit over the coming years.
However, the rapid expansion of AI infrastructure has also created challenges for equipment manufacturers. Supply constraints affecting components such as memory chips have pushed prices higher.
Rival Ericsson has said it has managed these pressures with the help of customers bringing forward purchases during contract negotiations ahead of expected price increases.
Nokia is also collaborating with Nvidia to develop mobile-network equipment powered by the US chipmaker’s advanced processors. This approach moves beyond the specialised chips traditionally used in telecommunications networks.
The partnership forms part of Hotard’s broader strategy to prepare Nokia for a future in which AI computing extends beyond data centres into communications networks.
Nokia shares closed at €8.23 in Helsinki on Wednesday. The stock has gained approximately 50% so far this year, reflecting growing investor interest in the company’s AI infrastructure strategy.
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