Ancient giant beast Nokia Q1 profits exceed expectations, AI data center transformation shows initial results

Bloomberg reports that Nokia’s adjusted operating profit in Q1 2026 reached €281 million, surpassing analyst estimates of €244 million by about 15%. Previously mired in the mobile network device swamp, the Finnish veteran is attempting a generational transformation through its AI data center connectivity business.
(Background: Is Nokia going to launch a Web3 phone? Applying for digital asset encryption patents, optimistic about blockchain development)
(Additional context: Nvidia’s earnings report hits tonight! On Polymarket, the probability of beating expectations is 90%; Hyperliquid’s whale is 10x leveraged long NVDA)

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• From Towers to Data Centers
• What Nvidia’s $1 Billion Purchase Is About
• Ericsson’s Warning, Nokia’s Opportunity

Nokia (Nokia) released its first-quarter financial report: adjusted operating profit of €281 million, exceeding analyst expectations of €244 million by about 15%.

Although this number in itself isn’t particularly impressive, the story behind it is worth paying attention to. This European veteran company spent twenty years circling the mobile communications equipment market, watching the 5G upgrade wave come slowly, and is now trying to redefine who it is.

Bloomberg notes that over the past year, Nokia’s stock price has almost doubled. The driver isn’t any specific quarterly figures, but the market’s collective imagination of an “AI infrastructure transformation.”

From Towers to Data Centers

Nokia completed a business restructuring at the end of last year. The company split its business into two core units:

1. Network Infrastructure focuses on connectivity equipment for AI data centers

2. Mobile Infrastructure takes over the traditional mobile network equipment business. Other non-core assets are packaged into the “investment portfolio,” while defensive businesses are incubated separately

In simple terms: Nokia is betting its future on “data center connectivity,” keeping its legacy businesses going after bundling them, and then focusing on moving forward.

The numbers from this quarter initially validate that logic. CEO Justin Hotard said that, within the company’s annual guidance for adjusted operating profit of between €2 billion and €2.5 billion. During the earnings call, he specifically pointed out that AI and cloud customers are the main sources of growth this quarter, rather than the traditional mobile device business.

What Nvidia’s $1 Billion Purchase Is About

Nvidia took a stake in Nokia with $1 billion last year and will provide AI computing equipment for the AI-driven upgrade of wireless networks via its connectivity. Customer trials are expected to begin later in 2026, and there are already 10 customers that have confirmed participation.

The logic behind this investment is worth breaking down. Nvidia’s moat has been built over the long term on data center GPUs, but with rising demand for AI inference—that is, the computation required for each time an AI model responds to user requests—moving from the cloud to the edge network, wireless infrastructure has become the new battleground. Nokia’s mobile device technology, combined with Nvidia’s computing power, creates an attempt to “enable telecom towers to run AI.”

$1 billion isn’t charity; it’s Nvidia’s plan for the next layer of computing infrastructure, and Nokia is part of the entry ticket.

Ericsson’s Warning, Nokia’s Opportunity

Nokia’s biggest European competitor, Ericsson, released another version of the story last week. Bloomberg reports that Ericsson’s earnings fell short of analysts’ expectations and that the company warned that a surge in chip demand is driving up costs.

This comparison is worth looking at closely: both are European mobile device duopoly players, yet Nokia beat expectations this quarter while Ericsson fell short. The difference isn’t just execution capability; it’s the result of strategic choices. Nokia placed its bets earlier on AI infrastructure connectivity, while Ericsson has been struggling with chip-cost pressure in its traditional business.

Of course, Nokia’s transformation has only just entered its first full financial quarter. The impressive numbers in this quarter are an initial signal of “the transformation looks promising,” not a final confirmation that the transformation has succeeded. Sales in the Network Infrastructure segment were slightly below expectations, reminding the market that while AI data center connectivity is growing, its scale is still limited in the short term.

The question Nokia faces next is how to turn Nvidia’s partnership into repeatable customer revenue—rather than just a story that excites investors.