NOK Q2 Earnings Report: AI network demand remains strong The highlight of this quarter is still AI-related business. Network Infrastructure grew 12% year-over-year, with Optical up 20%, IP up 16%, and revenue from AI & Cloud customers doubling, up 105% year-over-year. More importantly, the orders. Q2 AI & Cloud new orders reached €2.8 billion, and management stated that about half of this will convert into revenue within the next 12 months. This indicates that orders are still piling up, with no signs of demand slowing down. The company didn’t raise its full-year guidance, which might disappoint the market a bit. But the reason given by management is clear: demand is strong, but supply remains the bottleneck. Their exact words: "Demand remains strong, while supply continues to be the main industry constraint." This aligns with the pre-earnings assessments from Jefferies and J.P. Morgan: the demand for AI optical networks and IP networks is stronger than the market expected, but revenue realization is constrained by production capacity and supply chain issues. My view hasn’t changed. Aside from not raising the full-year guidance, everything else looks good, especially the AI & Cloud orders (€2.8 billion in Q2, compared to €1 billion in Q1, with the backlog continuing to accumulate rapidly, further improving revenue visibility for the next year). If supply gradually eases in the coming quarters, these secured orders will continue to convert into revenue. For Nokia, the current challenge is delivery capacity.