Nokia $NOK releases 2026 Q2 earnings: overall a positive beat, AI transformation fully realized

Nokia’s revenue this quarter meets expectations, but profit, gross margin, and EPS all exceed forecasts across the board. The quality of earnings is significantly stronger than the revenue performance. The biggest highlight of this round isn’t traditional 5G equipment, but a broad surge in demand for optical and IP networks driven by AI data centers—its transformation logic has been put into practice.

1. Core financials exceed expectations
Revenue was €4.82B, up 8% year over year. Comparable operating profit, profit margin, and EPS all substantially beat expectations. Profit growth outpaced revenue growth by a wide margin, and profitability continues to improve.

2. AI & cloud become the core growth engine
AI and cloud business revenue more than doubled, up 105% year over year. Orders in the single quarter reached €2.8 billion. Half of the orders are expected to be converted into recognized revenue within the next 12 months. AI has moved from concept to tangible earnings growth.

3. Business structure undergoes a complete switch
Clear high-growth tracks: optical networks up 20%, and IP networks up 16%.
Traditional wireless networks grew only in the low single digits. The company’s growth momentum has fully shifted to AI-compute interconnect and optical communications infrastructure.

4. Only risk: near-term cash flow pressure
Cash flow weakened this quarter due to capacity expansion and inventory stocking, as well as reorganization expenses. This is typical “growth-upfront” investment; it is currently the biggest uncertainty.

5. No meaningful upgrade to full-year guidance
On-paper adjustments are technical business reclassifications. Real operational guidance remains unchanged.

Summary
Nokia’s Q2 is a high-quality positive earnings report: a breakout in AI orders, profit beating expectations, and confirmation of the transformation.
For follow-through in the stock price, what matters next is the speed of order fulfillment, cash inflows in the second half of the year, and management’s guidance comments.