Nokia Q3 2025: AI and Optical Networks Drive Growth, Shares Jump After Results
Nokia has reported a solid set of Q3 2025 results, beating expectations and showing that its shift toward AI-driven and 5G network infrastructure is paying off. Strong demand for optical and cloud network solutions, along with stabilising mobile network sales, helped push both revenue and investor confidence higher. Following the report, Nokia’s shares jumped by around 10%, adding more than €3 billion to its market value.
Key Takeaways
- Net sales up 9% year-on-year on a comparable basis (12% reported), with all business groups growing.
- Optical Networks led the charge with +19% growth, driven by AI and cloud customers.
- Cloud & Network Services grew 13%, supported by strong operator investments in 5G Core.
- Mobile Networks showed 4% growth, suggesting the segment is stabilising after a tough period.
- Comparable gross margin slipped 150 bps to 44.2%, mainly due to product-mix effects, while operating margin reached 9.0%.
- Free cash flow: €0.4 billion.
- Net cash: €3.0 billion.
Nokia slightly raised its comparable operating profit outlook for 2025 to €1.7–2.2 billion (from €1.6–2.1 billion), following a technical change in how it reports venture-fund investments.
Strategy and Highlights
CEO Justin Hotard said that “all business groups contributed to growth,” highlighting the growing role of AI and cloud customers, which now account for 6% of total sales and 14% of Network Infrastructure sales.
Optical Networks: Nokia began shipping its new 800G ZR/ZR+ pluggables for data-center interconnect to a large U.S. customer. The company also plans to open a second indium-phosphide (InP) semiconductor fab in San Jose next year.
Cloud & Network Services: Nokia’s cloud-native 5G Core continues to gain traction, and the company claims to be #1 in Voice Core (excluding China) according to Dell’Oro.
Mobile Networks: Modest but positive growth. Nokia signed a major radio-supply deal with VodafoneThree, marking a comeback in that network.
Venture investments: Nokia will scale down passive venture-fund activity, refocusing fully on its core network business.
Margins and Segment Notes
Despite strong top-line growth, margin pressure persists — a result of weaker software contribution in Mobile Networks and a less favorable product mix.
Nokia Technologies, its IP-licensing arm, grew sales by 11% to €391 million, proving that patents and royalties remain a solid revenue stream.
Looking ahead, Nokia expects Q4 sales to be slightly above normal seasonality due to a strong order backlog, with Network Infrastructure leading growth, Cloud & Network Services expanding, and Mobile Networks remaining stable.
And What About Phones?
As usual, there was no mention of HMD Global or Nokia-branded phones in the report. The company continues to focus entirely on its B2B business — network infrastructure, cloud, and IP licensing — rather than consumer devices.
Market Reaction
But, investors liked what they saw. Nokia’s stock rose more than 10% after the announcement, with analysts praising the company’s growth in AI-driven and optical segments, its positive cash flow, and renewed confidence in the 2025 outlook.
Nokia’s Q3 2025 results mark a turning-the-corner moment. Growth in optical, cloud, and 5G core solutions shows the company is successfully transforming into a future-focused B2B tech leader. Margins are still under pressure, but with stabilising mobile networks, positive cash flow, and clear strategic direction, Nokia seems to have regained both momentum and investor trust. If the AI and optical “supercycle” continues, the Finnish giant might finally be ready to enter a new phase of sustainable growth — not as a phone brand, but as a backbone of the connected world.
