Nokia's financial report shows: Sales from AI and data center clients have increased

Source: Global Market Report

Nokia has benefited from strong demand from artificial intelligence and data center customers, leading to a surge in sales of the company's network infrastructure equipment, while maintaining its full-year performance guidance.

The Finnish telecommunications equipment supplier has repositioned itself, seeking growth beyond the traditional telecom operator market by harnessing the explosive growth in artificial intelligence and data center sectors.

To support this strategy, the company currently operates two core business divisions: the Mobile Infrastructure division, responsible for traditional mobile communication technology and services, and the Network Infrastructure division, which provides artificial intelligence and data center network technologies.

On Thursday, Nokia stated that driven by demand from artificial intelligence and cloud computing customers in the Americas, first-quarter network infrastructure sales grew 12% year-on-year.

The company secured €1 billion in orders from artificial intelligence and cloud computing customers this quarter. It now expects full-year network infrastructure sales to grow by 12% to 14%, up from the previous projection of 6% to 8%. The company has announced additional investment in capacity to support business growth and seize opportunities in this high-growth market.

Sales of mobile infrastructure equipment declined 3% compared to last year, as growth in Europe, the Middle East, Africa, and Latin America was offset by a decline in the North American market.

Looking ahead to the full year, Nokia said its current performance is slightly above the midpoint of the group's full-year comparable operating profit guidance range (€2 billion to €2.5 billion).

However, Nokia's CEO, echoing recent statements from Swedish competitor Ericsson, said that large-scale investments in the artificial intelligence and cloud computing sectors are causing shortages of key components.

He said during a Thursday presscall that due to demand, the delivery cycle for components across the industry is lengthening; and as semiconductor prices are expected to rise, the company is seeking ways to secure supply and control costs.

"These costs are being passed downstream and, in fact, many customers understand and accept this. We are working together with our customers to find solutions," he said. "This is a general industry trend and we are no different from our peers."

He added that Nokia is also taking the opportunity to optimize product design retrospectively, aiming to lower product manufacturing costs.

Conflict in the Middle East has also disrupted supply chains in many industries, but he said that, so far, the direct impact on Nokia's full-year business is expected to be limited.

"Clearly, we are closely monitoring this issue," he said. "But as of now, there is no significant material impact expected."

Nokia's group comparable operating profit rose 54% year-on-year in the first quarter to €281 million, above the €266 million forecast by financial data provider FactSet.

Sales for the period were €4.5 billion, slightly below the FactSet estimate of €4.56 billion.