Nokia delivered a solid start to the year, with optical networks proving a lucrative revenue driver, leading to a 20 percent bump for the vendor.

The Finnish firm reported a six percent Year-on-Year increase in net sales for its recently reformed Network Infrastructure segment during the first quarter of the year, with optics a leading growth factor, buoyed by strong demand owing to a book-to-bill ratio of “well above one.”

Nokia added that this strong optics growth will result in higher capital expenditures for the full year as it looks to add more manufacturing capacity to support demand.

For the full year, Nokia now expects its optical networks and IP networks offerings to grow between 18 percent and 20 percent, while its Network Infrastructure segment as a whole was revised upwards to 14 percent, owing to projected growth in the aforementioned product areas.

Nokia has sought to push further into the optics space following its $2.3 billion acquisition of Infinera. In the time since the acquisition closed, its optical network offerings have repeatedly raised Nokia’s finances amid soaring demand from customers in the data center space.

Optical network sales jumped 17 percent last year due to ever-increasing AI infrastructure-related demands. Striking while the iron’s hot, Nokia debuted a slew of coherent optical systems during the recent OFC show in Los Angeles, including a range of full-band transponders, coherent pluggables for data center interconnect and scale across applications, and so-called coherent lite systems for short-reach campus and enterprise environments.

CEO Justin Hotard told investors that Nokia is looking to “maximize” opportunities in what he described as an “accelerating market,” adding: “As a result, we are currently tracking somewhat above the mid-point of our full year financial outlook of $2.3bn to $2.9bn in comparable operating profit.”

On the OFC launches, Hotard said Nokia’s increased optical lines will “unlock new applications and reduce total cost of ownership by up to 70 percent for our customers.”

“Products will begin sampling in mid-2027, with volume production starting in the second half,” Hotard added, confirming that its optical semiconductor fab located in Sunnyvale, California, which creates the indium phosphide found in its optics line, is “on track to begin ramping production later this year.”

AI & cloud sales surge; mobile holds steady

While its optics technologies look to have stolen the show for Q1 2026, Nokia also reported strong growth in its Mobile Infrastructure unit.

The segment, which incorporates Nokia’s Core Networks, Radio Networks, and Technology Standards, saw an operating margin of 8.9 percent. Core Software drew a three percent sales growth, while radio network lines were “flat.” Technology Standards, meanwhile, grew 10 percent, owing to several new deals signed during the quarter.

Hotard told investors that integrations for the revamped unit are “on track,” with the vendor “making progress” on its AI radio access network (AI-RAN) efforts. The firm has doubled down on the latter area, showcasing additions to its AirScale portfolio at this year's Mobile World Congress (MWC) event with a view to capture growing interest from operators keen to meet rising AI-driven traffic demands.

Hotard revealed Nokia is working with 10 customers on AI-RAN efforts, including a recent partnership with Orange signed earlier this month.

Nokia also saw strong demand in sales from customers in and around the AI and cloud space, where net sales grew 49 percent and now account for eight percent of group sales.

Hotard told investors that Nokia secured $1.1bn in sales from AI and cloud customers during the most recent quarter, with firms snapping up both pluggables and line systems.

“At our Capital Markets Day in November, we outlined our view of the AI supercycle and the market opportunity for Nokia. Since then, demand has accelerated significantly,” Hotard said, noting this acceleration will see AI and cloud sales surge at a 27 percent compound annual growth rate (CAGR) compared to the 16 percent CAGR growth forecast late last year. "Across the supply chain, demand is accelerating and lead times are extending, reflecting the scale of investment underway.”