Nokia’s CEO Justin Hotard views the current AI boom as the front end of an AI supercycle, similar to the 1990s internet revolution, dismissing bubble fears amid strong quarterly profits driven by AI demand. This outlook highlights long-term growth potential in artificial intelligence for Nokia.
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Nokia’s adjusted operating profit for the third quarter reached €435 million, exceeding analyst estimates of €324 million.
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AI and cloud customers contributed up to 6% to Nokia’s quarterly sales through network infrastructure supporting data centers.
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Hotard compares AI growth to the internet era, projecting favorable long-term trends despite short-term bubble concerns, with 2025 profit guidance at €1.6 billion to €2.1 billion.
Discover Nokia CEO Justin Hotard’s bullish stance on the AI supercycle and how it’s fueling company growth. Explore profits, strategies, and future outlook in this in-depth analysis.
What is Nokia’s Perspective on the AI Supercycle?
Nokia’s perspective on the AI supercycle positions it as a transformative force akin to the 1990s internet boom, according to CEO Justin Hotard. In a Reuters interview, he emphasized that artificial intelligence is driving sustained long-term growth, even amid debates over potential bubbles. Nokia’s recent financial performance, bolstered by AI-related demand, underscores this optimistic view, with adjusted profits surpassing expectations.
How is Nokia Benefiting from AI-Driven Data Center Demand?
Nokia is capitalizing on the surge in data center infrastructure required for artificial intelligence applications. Following its acquisition of U.S.-based optical networking firm Infinera, the company has seen increased sales in optical and cloud segments. This has directly impacted quarterly revenue, with AI and cloud customers contributing up to 6% to overall sales through enhanced network infrastructure.
Supporting data from Nokia’s earnings report shows an adjusted operating profit of €435 million for the third quarter, well above the average analyst forecast of €324 million. This performance comes despite challenges like tariff impacts from the previous U.S. administration and currency volatility, which prompted a revised full-year guidance in July. For 2025, Nokia anticipates operating profits between €1.6 billion and €2.1 billion, reflecting confidence in AI’s role.
Experts in the telecommunications sector, including analysts from financial institutions, note that Nokia’s strategic shift toward AI integration in radio access and fiber networks is timely. As global companies invest heavily in AI capabilities, demand for robust networking solutions continues to escalate. Hotard, formerly Intel’s executive vice president and general manager of the data center and AI group, brings deep expertise to Nokia’s pivot, which began intensifying after the 2013 sale of its mobile phone business.
Frequently Asked Questions
What triggered Nokia’s strong third-quarter performance in 2025?
Nokia’s third-quarter results were boosted by robust demand for optical and cloud networking products, particularly from AI-driven data centers. The acquisition of Infinera played a key role, enabling the company to meet Big Tech’s infrastructure needs and achieve an adjusted operating profit of €435 million, surpassing estimates by a significant margin.
Is the AI sector facing a bubble according to Nokia’s leadership?
According to Nokia CEO Justin Hotard, the AI sector is in the early stages of a supercycle, much like the internet in the 1990s. While acknowledging potential short-term fluctuations, he focuses on enduring trends that favor long-term expansion, supported by rising data center investments worldwide.
Key Takeaways
- AI as a Growth Driver: Nokia’s CEO likens the current AI boom to the internet revolution, emphasizing its potential for sustained expansion despite bubble concerns.
- Financial Resilience: Third-quarter profits hit €435 million, driven by 6% sales contribution from AI and cloud segments, with 2025 guidance set at €1.6-2.1 billion.
- Strategic Acquisitions: The Infinera purchase has positioned Nokia to capture data center demand, integrating AI into core networking products for future competitiveness.
Conclusion
In summary, Nokia’s perspective on the AI supercycle reflects a commitment to leveraging artificial intelligence for long-term growth, as articulated by CEO Justin Hotard in his Reuters interview. With strong quarterly results and a focus on AI infrastructure, the company is navigating market uncertainties effectively. As Hotard prepares to outline his growth strategy at an upcoming capital markets day, Nokia’s integration of AI into mobile networks and beyond signals promising advancements. Investors and industry observers should monitor these developments for insights into the evolving AI-driven data center demand, positioning Nokia at the forefront of technological innovation.
Nokia’s transition under Hotard’s leadership, drawing from his Intel background, marks a pivotal chapter. The company’s core mobile networks business remains stable, but the infusion of AI across production areas like fiber and radio access networks is enhancing efficiency and market reach. This multifaceted approach addresses the sharp rise in data center needs, where companies worldwide are racing to build AI-supporting infrastructure.
Despite surveys, such as one from Bank of America this month indicating fund managers’ worries about an AI bubble, Hotard’s stance aligns with historical tech cycles that weathered initial skepticism. Prominent figures like Amazon founder Jeff Bezos and OpenAI CEO Sam Altman have voiced cautions on over-enthusiasm, yet demand metrics tell a different story. Nokia’s earnings beat exemplifies how practical applications are translating into tangible revenue.
Looking ahead, Hotard’s April appointment sets the stage for deeper AI embedding in Nokia’s operations. The full-year profit adjustment in July, accounting for external pressures like tariffs and currencies, demonstrates prudent management. With mobile networks as the foundation, Nokia’s AI initiatives could redefine its competitive edge in telecommunications, fostering innovation that benefits the broader sector.
This optimism is grounded in observable trends: global AI investments continue to climb, with network providers like Nokia essential to the ecosystem. By downplaying short-term bubble risks and focusing on enduring favorable trends, Hotard reassures stakeholders of Nokia’s trajectory. As the company approaches its capital markets day, expectations are high for detailed strategies that build on these AI foundations.
