Last Update 10 Mar 26

Fair value Increased 32%

KEYS: Future Returns Will Rely On Sustained AI And Wireline Order Momentum

Our Keysight Technologies fair value estimate has been raised from $226.46 to $298.62, as analysts lift price targets into the $268 to $340 range on stronger Q1 results, faster revenue growth tied to AI and wireline demand, and updated models that assume a higher future P/E multiple despite broadly similar margin and discount rate assumptions.

Analyst Commentary

Recent Street research on Keysight Technologies clusters around a more constructive stance on growth, execution, and where the shares might trade relative to earnings. Most published work emphasizes stronger Q1 performance, expanding demand tied to AI and wireline, and updated models that apply higher P/E multiples.

Bullish Takeaways

Bullish analysts highlight fiscal Q1 results as stronger than expected, with some calling out a second consecutive quarter of meaningful revenue growth acceleration as a key support for higher valuation multiples.
Several research notes point to accelerating AI related demand and broader exposure to secular growth drivers as reasons to raise revenue and earnings forecasts, which in turn underpins higher fair value and price targets.
Order trends are a central theme, with one major bank describing core orders growing 22% year over year in fiscal Q1 and suggesting that demand is broadening beyond AI, which supports the case for sustained growth and premium pricing on the stock.
Wireline strength stands out, with multiple analysts flagging record wireline orders that have surpassed wireless and citing this shift as evidence of execution on newer demand pockets that could support long term growth frameworks, including an updated FY26 adjusted EPS growth outlook of 20% plus.

Bearish Takeaways

Despite broadly higher targets, one large firm maintains an Equal Weight view, indicating that some analysts still see a more balanced risk reward profile and are cautious about pushing valuation too far above current earnings power.
Comments around wireless suggest that part of the business is not yet contributing at prior levels, with at least one model assuming a recovery only in the second half of 2026, which introduces timing risk for growth and margins if that rebound is slower than expected.
The move to higher P/E multiples across several models relies on continued execution on AI, wireline, and order strength. Any moderation in these drivers could challenge the valuation support implied by targets in the high US$200s to US$300s.
Some earlier research responses simply nudged price targets higher by mid single digit dollar amounts. This can be read as more cautious confidence in Keysight’s trajectory rather than a strong conviction that the stock should re rate substantially.

What's in the News

Keysight issued Q2 FY26 revenue guidance of US$1.690b to US$1.710b, with the midpoint implying approximately 30% year over year growth (Corporate guidance).
A series of AI centric test and measurement launches target data center and high speed interconnect customers, including new scale up validation solutions for UALink 200G, PCIe 7.0 and CXL 3, plus a 3D Interconnect Designer tool for chiplet and 3DIC packaging (DesignCon 2026 product announcements).
The company is highly visible at Mobile World Congress 2026, with multiple collaborations on 5G Advanced, 6G, AI RAN and non terrestrial networks alongside Qualcomm, Samsung, NVIDIA, Ericsson, Northeastern University and others (MWC 2026 collaborations and demos).
Keysight continues to focus R&D on AI readiness in software and device modeling, introducing SOS Enterprise for governed engineering data management, AI powered assistants in Advanced Design System, and a Machine Learning Toolkit for faster semiconductor model extraction (EDA and software product announcements).
Outside core wireless and data center testing, Keysight is expanding in automotive and EV infrastructure testing with new high power and megawatt charging discovery systems and a broad CES 2026 showcase covering automotive design, validation and cybersecurity (EV charging and CES 2026 announcements).

Valuation Changes

Fair Value: Raised meaningfully from $226.46 to $298.62, reflecting updated modeling assumptions.
Discount Rate: Adjusted slightly lower from 8.55% to 8.44%, a modest change in the risk input.
Revenue Growth: Increased in the model from 8.98% to 11.46%, indicating higher expected top line expansion in future periods.
Net Profit Margin: Kept broadly similar, moving marginally from 19.60% to 19.52% in the updated estimates.
Future P/E: Lifted from 35.68x to 41.44x, implying a higher valuation multiple applied to projected earnings.

6 views

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.

Have other thoughts on Keysight Technologies?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

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.

AI And Next Generation Wireless Will Unlock New Horizons