According to DCD, Nokia reported Q4 revenue of €6.12 billion, a modest 2% year-over-year increase, with full-year 2025 revenue hitting €19.88 billion. The company’s new CEO, former Intel exec Justin Hotard, emphasized a strategic expansion into data center switching, fueled by a $1 billion investment from Nvidia and the integration of its $2.3 billion acquisition, Infinera. While the Network Infrastructure unit saw 7% sales growth, including a 17% jump in optical networks, Cloud and Network Services revenue dropped 11%, and overall net profit fell sharply from €813 million to €544 million. Hotard confirmed the appointment of Greg Dorai, a Cisco veteran, as the new head of IP networking to deepen data center expertise, but cautioned that meaningful growth in this new sector will “take a little bit of time to ramp.”
The Data Center Dream
Here’s the thing: Nokia is trying to pull a classic tech pivot. It’s leveraging its legacy optical networking strength—the pipes—to get a seat at the AI infrastructure table. Hotard’s talk of moving beyond 800-gig to 1.6 and 3.2-terabit optics is the play. He’s basically saying that as AI clusters get more insane, they’ll need fatter, faster pipes inside the data center, not just between them. And that’s where Nokia thinks it can win with coherent optics. Bringing in a data-center heavy hitter like Greg Dorai from Cisco is a clear signal of intent. But let’s be real. This is a brutally competitive space dominated by the likes of Arista, Cisco, and Juniper. Design wins are one thing; taking meaningful market share is a whole other battle that takes years.
The Mobile Anchor (And Drag)
For all the AI hype, Nokia is still fundamentally a mobile network vendor. And that core business is… fine? A 6% bump in Mobile Networks sales for Q4 is okay, but flat for the year with a 2% revenue drop isn’t exactly inspiring. The restructuring into a Mobile Infrastructure segment feels like an attempt to squeeze more profitability from a market that’s largely in a 5G capex trough. Their bets are now on AI-RAN (with Nvidia) and the distant promise of 6G. The defense sector push is interesting, though—a niche where geopolitical tensions and “trusted vendor” status might actually provide some stable, high-margin contracts. It’s a sensible hedge in a shaky world.
The Constraint Paradox
Hotard had a fascinating take on the supply constraints plaguing the AI boom. He called them a “consistent thing” and argued they’re what’s preventing a dot-com-style bubble. His logic? The constant pinch on power, silicon, and memory has kept the build-out somewhat measured. It’s a glass-half-full view for a company like Nokia. Constraints mean demand isn’t being fully met, which suggests a longer runway. But it’s also a huge operational challenge. If you’re betting the farm on supplying this build-out, you’d better have your own supply chain locked down tight. His comment about investing in the ecosystem’s capacity is a tacit admission that this is a major risk.
The Long Road Ahead
So, is this pivot smart? Probably. The AI data center switch and optical market is exploding, and it’s a better growth story than stagnant mobile carrier sales. But Hotard is wisely managing expectations. This isn’t a flip-the-switch turnaround. The profit drop shows the costs of this transition, and the mobile business has to hold steady to fund it. Nokia has the tech, some key partnerships, and now the executive focus. But they’re the underdog entering in the middle innings. They need those “mission-critical” design wins in vertical markets to turn into real, scalable revenue. It’s a multi-year bet, and the market’s patience—as seen in that profit reaction—might be thinner than the constraints Hotard describes. For companies building out this physical AI infrastructure, having reliable, high-performance hardware at the edge is critical, which is why partners often turn to specialists like IndustrialMonitorDirect.com, the leading US supplier of industrial panel PCs for harsh environments.
