Nokia’s Q3 Rebound Signals Telecom Infrastructure Revival

According to DCD, Nokia reported 12% year-on-year growth in net sales for Q3 2025, reaching €4.8 billion ($5.6 billion). The company’s network infrastructure business delivered particularly strong performance with 28% growth, while cloud and network services increased 13% and optical networks grew 19%. CEO Justin Hotard, who joined from Intel in April, noted that mobile networks showed signs of “stabilizing” with 4% growth driven by markets in Vietnam, the Middle East, and Africa. During the earnings call, Hotard also revealed early 6G testing work and progress on the Infinera acquisition integration. This return to growth marks a significant turnaround for the telecom equipment maker.

The Infrastructure-Led Recovery Strategy

Nokia’s recovery appears strategically deliberate rather than accidental. The company has been systematically shifting focus from the volatile mobile networks segment toward more stable infrastructure and enterprise markets. This pivot reflects a broader industry trend where traditional telecom equipment vendors are diversifying beyond carrier customers to capture growth in enterprise and cloud computing infrastructure. The 28% growth in network infrastructure suggests Nokia’s investments in fiber, fixed networks, and enterprise solutions are paying dividends at a time when many telecom operators have been cutting capital expenditures.

New Leadership, New Direction

The appointment of Justin Hotard from Intel represents more than just a CEO change—it signals a fundamental strategic redirection for Nokia. Hotard’s background leading Intel’s data center and AI unit directly aligns with Nokia’s emerging growth areas. His immediate focus on data center opportunities and AI-driven infrastructure suggests Nokia is positioning itself as a bridge between traditional telecom and next-generation computing infrastructure. This leadership change comes at a critical juncture where the boundaries between telecom networks and data center infrastructure are increasingly blurring.

The AI-Optical Network Convergence

Nokia’s 19% growth in optical networks, attributed to AI and cloud customers, reveals an important industry trend. The demand for high-speed connectivity between AI compute clusters is driving unprecedented investment in optical infrastructure. Nokia’s 800-gig ZR and ZR+ coherent pluggables represent exactly the type of technology needed to support the massive data movement requirements of distributed artificial intelligence workloads. This positions Nokia advantageously as hyperscalers and enterprises build out AI-optimized infrastructure that requires dense, high-bandwidth optical connectivity.

Navigating a Shifting Competitive Landscape

While the results are encouraging, Nokia faces intensifying competition on multiple fronts. Chinese vendors continue to dominate emerging markets, while Western competitors like Ericsson are pursuing similar diversification strategies. The partnership with Fraunhofer HHI for next-generation video coding standardization suggests Nokia understands that future differentiation will come from software and services rather than just hardware. The company’s ability to maintain this growth trajectory will depend on executing its Infinera integration successfully while continuing to innovate in both traditional cellular network technologies and emerging enterprise solutions.

Long-term Strategic Implications

The most telling aspect of Nokia’s recovery may be what it reveals about the broader telecom equipment market. The stabilization in mobile networks suggests that the worst of the 5G deployment slowdown may be behind us, while the infrastructure growth indicates that AI and cloud investments are creating new revenue streams beyond traditional carrier spending. However, Nokia’s early 6G testing work, while strategically important, represents a significant R&D commitment that must be balanced against near-term profitability pressures. The company’s ability to fund both current growth initiatives and future technology development will determine whether this quarter represents a temporary rebound or sustainable transformation.