Nokia Reports Double-Digit Growth as Optical Networks Lead Q3 Performance
The company said all business groups contributed to the improvement, but the optical segment was the standout driver of growth, reflecting strong momentum in AI and cloud-related infrastructure investments.
Nokia Corporation has reported a solid third-quarter performance for 2025, with net sales rising 12% year-on-year (9% on a constant currency and portfolio basis), led by surging demand in Optical Networks, which grew 19% during the period. The company said all business groups contributed to the improvement, but the optical segment was the standout driver of growth, reflecting strong momentum in AI and cloud-related infrastructure investments.
According to Nokia’s Q3 Interim Report, the Network Infrastructure division achieved 11% net sales growth, largely fueled by Optical Networks performance, which benefited from large-scale data transport requirements from AI and Cloud service providers. The segment’s strong order intake pushed its book-to-bill ratio above 1, confirming robust market demand.
Nokia’s Optical Networks business also achieved a key milestone with the commercial availability of its 800G ZR/ZR+ pluggable transceivers for data center interconnect applications. The technology has begun shipping to a major U.S. customer, reinforcing Nokia’s leadership in high-capacity optical transmission. To further support the growth of this segment, the company announced plans to open a second Indium Phosphide semiconductor fabrication facility in San Jose before the end of 2026, expanding production capacity for its optical components business.
President and CEO Justin Hotard described Q3 as a “solid performance,” noting that AI and cloud-related customers now account for 6% of Nokia’s total net sales and 14% of Network Infrastructure revenues. He said the increasing demand for high-performance connectivity is driving sustained investment in optical systems that underpin the AI supercycle.
While the group’s comparable gross margin declined by 150 basis points year-on-year to 44.2%, Nokia maintained stable operational performance, excluding one-time gains recorded in the prior year. The company reported comparable operating profit of EUR 435 million and free cash flow of EUR 0.4 billion, with a net cash balance of EUR 3 billion.
Looking ahead, Nokia reaffirmed its 2025 outlook, projecting comparable operating profit between EUR 1.7 and 2.2 billion, a technical revision upward due to changes in venture fund reporting. The company remains confident in its growth trajectory, citing strong order books in optical and IP networking, continued traction in 5G core deployments, and expanding opportunities in cloud-driven infrastructure.
Nokia said it is well-positioned to capitalize on accelerating global demand for advanced optical and broadband networks. The company will further outline its strategic direction and growth initiatives at its Capital Markets Day in New York on November 19, 2025, where it plans to unveil its roadmap for unlocking the full potential of its network technologies amid the AI-driven connectivity boom.
