Nokia (NOK) CEO Justin Hotard says AI data centres face a supply problem, not a demand one. That firmly places him on one side of an ongoing debate over whether the industry is building too fast.
He made that case on CNBC’s “The Tech Download” podcast. “Reality is that if we could build 2x faster, our customers could build 2x faster, they probably would,” he said.
The timing is important. His comments follow Anthropic CEO Dario Amodei’s call to slow the development of the most advanced AI models. That call triggered a sell-off in AI stocks last month.
Hotard argued that demand does not hinge on new models. “Even if we didn’t have another frontier model released in the next three years, we could probably make tremendous progress just deploying the technology that’s there today,” he said.
I think he is right about demand. The catch is what his argument concedes. Nokia’s AI growth now runs on other companies’ supply chains, which changes how investors should read its order book.
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Nokia’s AI orders are piling up faster than sales
Nokia’s numbers show the gap. The company booked €2.8 billion in orders from AI and cloud customers in the second quarter, according to its half-year report filed with the SEC.
Sales to those customers totaled €446 million, according to the filing. In other words, Nokia’s AI orders were approximately six times its AI revenue.
Nokia expects about half of those orders to generate revenue within 12 months, according to the report. Hotard said supply remains the industry’s main constraint, prompting customers to place longer-term orders.
That matters because buyers facing a shortage often order early and order extra to hold their place in line. In my view, part of Nokia’s AI order book is a reservation, not a guaranteed sale.
Memory chips and power now set Nokia’s pace
Nokia sells the technology that connects racks of chips inside data centers and links data centers across locations, according to CNBC. That puts it downstream of the components customers cannot get enough of.
Shortages of memory chips and energy are among the constraints facing the sector, CNBC reported. Nokia cannot connect servers that have not arrived or link sites still awaiting power.
Nokia’s filing acknowledges the exposure. It lists matching inventory and supplier commitments to customer demand as among its risk factors.
Nokia is producing more of its own optical parts. Its San Jose fab is due to ramp up later this quarter to meet demand expected in 2027 and 2028, according to the filing. The company also agreed to buy NXP’s chip plant in Chandler, Arizona.
Companies do not buy fabs to address a shortage they expect to vanish next year. I read the move as a bet that supply, not demand, remains the scarce asset.
Nokia stock is running ahead of its AI revenue
Nokia is a Finnish network equipment maker whose U.S.-listed shares trade as NOK. The stock has climbed around 130% over the past year, according to CNBC, as investors recast it as an AI picks-and-shovels play.
Nvidia helped drive that run with a $1 billion investment for a 2.9% stake in October 2025, Bloomberg reported. Nokia shares posted their biggest jump in more than a decade on the news.
Even so, AI and cloud customers made up less than a tenth of Nokia’s second-quarter sales, based on figures in the filing. Telecom carriers still generate most of the revenue.
In my view, the market is pricing Nokia based on its order book, not its income statement. That works only if orders convert on schedule, which supply constraints threaten.
Still, the growth engine is real. Optical Networks sales grew 20% at constant currency in the second quarter, driven partly by AI and cloud customers, the filing shows. IP Networks, which includes data center switching, grew 16% on the same basis, the report shows.
Full-year guidance calls for 18% to 20% growth across IP and Optical combined, according to the filing. That target leaves little room for shipment delays.
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The real overbuild test comes when the bottleneck clears
Investment in the AI buildout will total $10.3 trillion from 2025 to 2032, according to research presented at the Brookings Papers on Economic Activity, CNBC reported. That spending assumes demand holds up for years.
Yet shortages blur the signal. When memory and power are rationed, every order looks like proof of demand, even ones placed only to secure a spot.
The cleaner test arrives when supply loosens, and nobody needs to order ahead. Nokia’s Oct. 22 earnings report offers an early read on whether AI orders are converting into sales or stacking up.
For AI suppliers, the shortage has been both a speed limit and a shield against claims of overbuilding. The story to remember is what happens when it lifts.
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