- Nokia is going all in on cloud and AI
- Hyperscaler orders accounted for 5% of all Nokia's net sales in Q2
- CEO Justin Hotard said Nokia will be throwing more R&D dollars at the cloud and AI market
After years of riding the radio access network (RAN) train, it seems Nokia is turning its attention toward the cloud to meet rising demand from hyperscalers and those investing in AI.
Nokia sort of signaled this shift with its recent acquisition of optical vendor Infinera, which brought with it a slew of hyperscale relationships. Manish Gulyani, CMO for Network Infrastructure at Nokia, recently told Fierce Network that the vendor works with everyone from Apple, Microsoft, CoreWeave and Nscale to smaller players looking to get into the AI game.
But Infinera was just the tip of the iceberg.
Nokia CEO Justin Hotard said on the company’s earnings call this week that “the market has shifted to cloud and AI driving the investment and the innovation curve on Fixed Networks.”
Indeed, Hotard noted that hyperscalers were “one of the biggest drivers of our order intake in the quarter” and accounted for 5% of net sales in Q2. That factors out to roughly $264 million (225 million Euros).
Nokia's R&D shift
As you might expect, Nokia is planning to shift its R&D spending to reflect that.
“The innovation curve has shifted. So, by default, our R&D has to be invested in that area,” The CEO explained. “We need to continue to gear our products and portfolios to exactly what those hyperscalers are looking for and then continue to work with them on a very close and intimate basis.”
Given Nokia spent around $5.28 billion (4.5 billion Euros) on R&D in 2024, that likely means it’ll be putting some serious cash behind these efforts.
It’s not just about optical networking technology, either. Hotard noted that customers in these areas have also stressed the importance of security, performance and ease of use and deployment. So, it’ll be working on improvements there as well, he said.
Cloud and core collide
Nokia’s focus on the cloud extends beyond working directly with hyperscalers and other data center operators. Hotard noted that the cloud has also started to permeate its mobile business as well.
“We've moved much more to a cloud-first strategy for core in terms of the tech stack, but also in terms of where we run those platforms. And I think, over time, we're going to see some of those things move even into RAN,” he said.
Hotard also said he believes the AI wave will help drive a renewed investment cycle in mobile technology.
“It's not there today, but….There's going to be a set of innovations that drive opportunity for us and opportunity for our customers,” he said, pointing to smart glasses, drones, autonomous vehicles and handset technology as potential avenues of innovation.
Read all of our coverage of Nokia here.