Last Update 24 Feb 26

Fair value Increased 2.61%

KEYS: Future Returns Will Depend On AI Test And Wireline Momentum

Analysts have nudged our Keysight Technologies fair value estimate higher to $226.46 from $220.69, as they lift price targets on the back of stronger than expected fiscal Q1 results, accelerating AI related demand, rising wireline orders, and expectations for continued revenue momentum supported by secular growth drivers and increased A&D investment.

Analyst Commentary

Street research is broadly constructive on Keysight Technologies, with several firms lifting price targets after fiscal Q1 and tying their views to AI demand, wireline strength, and expectations for continued execution.

Bullish Takeaways

Multiple bullish analysts raised price targets significantly, suggesting they see the current share price as not fully reflecting the company’s growth opportunities in AI testing, secular demand, and increased A&D exposure.
Several research notes point to fiscal Q1 as stronger than expected and call out a second consecutive quarter of meaningful revenue acceleration, which they view as support for higher earnings forecasts and richer valuation multiples.
Wireline revenue and record wireline orders are cited as key positives, with some analysts highlighting that wireline has already surpassed wireless. They expect this to improve further into 2026, reinforcing the view of more diversified growth drivers.
JPMorgan and Goldman Sachs emphasize Keysight’s exposure to long term secular growth drivers and deal integration synergies. They see this as supporting higher medium term revenue and earnings potential and as justification for higher price targets.

Bearish Takeaways

Not all research is outright bullish, with at least one firm maintaining an Equal Weight stance. This signals a more measured view on risk or valuation even as price targets move higher.
References to wireless recovery timing into the second half of 2026 point to execution risk if that recovery is slower or less robust than modeled, which could pressure growth assumptions embedded in higher targets.
Some targets are supported by assigning premium multiples, which leaves less room for error if revenue growth or AI related demand does not track updated expectations.
The emphasis on strong recent quarters and acceleration in growth also introduces a higher bar for future results. Any moderation versus these comments could challenge the more optimistic valuation cases.

What's in the News

Issued revenue guidance for the second fiscal quarter of 2026 of US$1.690b to US$1.710b, with the midpoint described as approximately 30% year over year growth (Corporate guidance).
Launched the Infiniium XR8 real time oscilloscopes, combining new hardware and the Infiniium 2026 software platform to support high speed digital and compliance testing across interfaces such as USB4v2, DisplayPort 2.1, and DDR5 (Product announcement).
Introduced a portfolio of AI data center scale up validation solutions, covering interconnect standards including UAlink 200G, PCIe 7.0, PCIe 5.0, and CXL 3, with demonstrations planned at DesignCon 2026 (Product announcement).
Expanded its EDA portfolio with 3D Interconnect Designer and a GDDR7 transmitter compliance solution, targeting chiplet based 3DIC packages and high speed memory designs used in AI, GPU, and data center applications (Product announcements).
Entered a collaboration with Point2 Technology to validate multi terabit e Tube interconnects for AI and ML data centers, using Keysight high speed digital test gear to assess performance, reach, and power efficiency compared with traditional copper and optical links (Client announcement).

Valuation Changes

Fair Value: $226.46, up slightly from $220.69, reflecting a modest upward adjustment in the model output.
Discount Rate: 8.55%, effectively unchanged from 8.54%, indicating a stable risk and return assumption.
Revenue Growth: 8.98%, in line with the prior 8.98% input, showing no material change to top line growth assumptions.
Net Profit Margin: 19.60%, essentially flat versus the prior 19.60%, keeping the earnings efficiency view steady.
Future P/E: 35.68x, up slightly from 34.77x, pointing to a modestly higher valuation multiple applied to projected earnings.

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Key Takeaways

Strong AI-driven demand, leadership in next-generation wireless technologies, and expansion into software are fueling sustainable growth and reducing reliance on traditional hardware.
Robust government and defense spending, along with advanced R&D and acquisitions, position Keysight for multi-year stability and strengthen its competitive advantages.
Risks from tariffs, macroeconomic shifts, and sector concentration could squeeze margins and earnings if mitigation, innovation, and diversification efforts lag or underperform expectations.

Catalysts

About Keysight Technologies

Provides electronic design and test solutions worldwide.What are the underlying business or industry changes driving this perspective?

Adoption of AI across digital infrastructure is accelerating demand for advanced testing solutions in compute, memory, networking, and interconnect, with Keysight's AI-focused investments leading to double-digit wireline and commercial comms growth; this trend is expected to drive sustained top-line revenue growth as AI workloads expand into new customer segments and applications over the coming years.
Early engagement and leadership in next-generation wireless technologies-such as ongoing 5G-Advanced deployments, direct-to-cell, non-terrestrial networks, and active participation in 6G research-position Keysight to capture significant share as new wireless standards roll out globally, supporting future revenue growth and a stable order outlook.
Expansion of software and recurring service offerings, now comprising 36% and 28% of total revenue respectively, increases gross and net margins by enhancing revenue stability, improving product mix, and reducing cyclicality from traditional hardware segments.
Increased government and defense spending in both the US and Europe is driving robust growth in aerospace/defense end markets, while sovereign R&D priorities (notably in quantum computing and advanced semiconductors) enable Keysight to benefit from multi-year funding cycles, supporting both higher margins and long-term earnings visibility.
Investments in advanced R&D and strategic M&A-highlighted by pending acquisitions in optical and simulation software-expand Keysight's differentiation in emerging areas such as quantum, photonics, electric vehicles, and next-generation semiconductors, strengthening competitive barriers and fortifying organic top-line growth potential.

Keysight Technologies Earnings and Revenue Growth

Keysight Technologies Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Keysight Technologies's revenue will grow by 6.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 10.4% today to 19.4% in 3 years time.
Analysts expect earnings to reach $1.2 billion (and earnings per share of $7.55) by about September 2028, up from $544.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 32.3x on those 2028 earnings, down from 53.4x today. This future PE is greater than the current PE for the US Electronic industry at 23.9x.
Analysts expect the number of shares outstanding to decline by 0.97% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.41%, as per the Simply Wall St company report.

Keysight Technologies Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The newly announced tariffs, which are expected to result in $150–$175 million in annual additional expenses, pose a significant risk if mitigation actions (supply chain optimization, pricing, supplier negotiations) prove less effective or take longer than planned; this could negatively impact net margins and earnings, particularly in the short-to-medium term and may also affect top-line competitiveness if costs are passed on to customers.
While current AI-fueled growth is strong, management acknowledges that a substantial portion of recent gains in wireline and data center market demand has come from high levels of investment and accelerated technology adoption; if AI infrastructure investments normalize, slow, or become cyclical, there could be a structural deceleration in demand that would weigh on revenue growth and earnings durability.
The company's exposure to global macroeconomic and geopolitical risks-especially ongoing and unpredictable trade policy changes, shifting government priorities in defense spending, and regulatory hurdles for international acquisitions (such as Spirent, Synopsys Optical Solutions, and Ansys PowerArtist)-could limit or delay revenue opportunities and amplify earnings volatility, particularly in high-growth international markets.
Management notes that certain end markets, notably automotive and consumer electronics, continue to face challenges and are growing slower than others; prolonged stagnation or decline in these verticals could result in concentration of revenue dependence on faster-growing segments (e.g., AI data centers, aerospace/defense), which increases Keysight's exposure to market-specific cyclical risks, adversely affecting long-term top-line growth and business stability.
Keysight's strategy to rely on recurring revenue from software and managed services, as well as expansion into new verticals (like quantum and advanced semiconductors), requires sustained and increasing R&D investment; if the pace of innovation, integration, or customer adoption in these areas falters-or if returns on R&D diminish relative to spend-there is risk of margin compression and below-target net margin expansion relative to longer-term projections.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $187.6 for Keysight Technologies based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $200.0, and the most bearish reporting a price target of just $157.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $6.3 billion, earnings will come to $1.2 billion, and it would be trading on a PE ratio of 32.3x, assuming you use a discount rate of 8.4%.
Given the current share price of $169.1, the analyst price target of $187.6 is 9.9% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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