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NOK · Forward model · Optical Networks · Bull case

What has to happen in Optical Networks

Model as of

This page changes Optical Networks inside the complete NOK model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

NOK forward model
Horizon
Consolidated fair value €11.23 all other verticals held in this portfolio case
Final-quarter revenue €1.99B 28% of company revenue
Explicit segment contribution €3.72B EBITDA less segment capex, before corporate items

The AI and cloud order book converts on management's own schedule and the new capacity arrives to meet it. Q2 2026 order intake was EUR 2.8 billion, net sales to those customers doubled to EUR 446 million (+105% constant currency), Optical grew 20% and IP 16%, IP order intake growth was particularly strong on Q1 design wins, and Nokia states the constraint is supply rather than demand - which is why the San Jose fab ramps in Q4 2026, Pennsylvania test and packaging goes up 10x from Q3 2026 and the NXP Chandler campus is under a definitive agreement. Here Optical and IP each run a point a quarter faster, the three Network Infrastructure lines carry 3.4 points more margin - which takes the segment's 2028 operating margin to about 17%, the top of its 13-17% target - and the exit is 13x on an 8.5% discount rate. It is worth EUR 11.23 a share.

Optical Networks

Basis quarter€868M
Final quarter€1.99B
Implied CAGR+18%
Final revenue mix28%

Optical transport and data-centre interconnect - the line the AI and cloud build-out actually buys. Net sales grew 20% year on year on a constant-currency basis in 2026 Q2 and Nokia is adding US manufacturing capacity (San Jose fab ramping in Q4 2026, Pennsylvania test and packaging up 10x from Q3 2026, the NXP Chandler campus from 2027) specifically because supply, not demand, is the stated industry constraint.

Last four quarters
2025 Q3 €782M Reported
2025 Q4 €981M Reported
2026 Q1 €821M Estimated
2026 Q2 €868M Reported
Optical transport systemsData-centre interconnectOptical components
Sequential growth +4.4%/qtr decaying toward +2.0% Deseasonalised Q2'25-Q2'26 trend, 4.4%/qtr; cross-checks the disclosed +20% constant-currency year on year.
Optical Networks

Latest: €1.99B (2031Q2E)

Period Value
2025Q1 €525M
2025Q2 €730M
2025Q3 €782M
2025Q4 €981M
2026Q1 €821M
2026Q2 €868M
2026Q3E €915M
2026Q4E €1.13B
2027Q1E €1.01B
2027Q2E €1.06B
2027Q3E €1.11B
2027Q4E €1.37B
2028Q1E €1.22B
2028Q2E €1.27B
2028Q3E €1.32B
2028Q4E €1.62B
2029Q1E €1.43B
2029Q2E €1.49B
2029Q3E €1.55B
2029Q4E €1.89B
2030Q1E €1.67B
2030Q2E €1.73B
2030Q3E €1.79B
2030Q4E €2.18B
2031Q1E €1.92B
2031Q2E €1.99B

Assumptions & reasoning

  • Nokia has never published an Optical Networks operating margin. All three Network Infrastructure lines carry the parent segment's derived 12.74% trailing EBITDA margin, and the model differentiates their growth, which is disclosed, not their profit, which is not.
  • US fab capacity is a supply story with no disclosed unit capacity, revenue per port or utilisation, so a capacity driver would have had to invent all three denominators; growth is the only evidenced driver here.
  • 2026 Q1 is derived as first-half business-unit net sales less the disclosed second quarter: 1 689 - 868 = 821. The three Network Infrastructure lines so derived sum to the recast segment total of 1 829 to the euro.
  • The 4.4% quarterly rate deliberately excludes 2025 Q1, which carries only one month of Infinera (closed 28 February 2025); fitting the raw six quarters gives 10.6% a quarter, which is an acquisition, not a trend.
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