Keysight Technologies, Inc.: Another Beat and Rise; AI Leading Growth

Research evidence excerpt

Keysight Technologies, Inc.: Another Beat and Rise; AI Leading Growth

Barclays | Keysight Technologies, Inc.

roughly-in line with our estimates (within $3M). GM and OM beat, though both were skewed

by the IEEPA refund impacts. Margin outperformance drove EPS of $2.87, 55 cents ahead of

our at-Street estimate.

• Positives: The AI-driven pieces of the business continue to accelerate with order growth led

by AI (though strength in A&D, semis, wireless also contributing). Growth outside of AI also

remains strong. A&D seeing strength from both Europe and US, and we expect this could be a

step change in A&D growth moving forward. Auto was stable with order growth again and

acquisition integration remains on track.

• Concerns: We do not expect Software & Services revenue to move materially higher as a

percentage of the business, though we view this largely due to the continued outperformance

of the hardware business not decels in S&S growth. If you back out the one-time tariff

benefits in the Q, FQ3 guidance implies a Q/Q decel, though we believe this largely due to

management conservatism and nothing with business fundamentals.

Estimates and rating: With continued outperformance across the business, we raise our PT to

$387 on 32x our FY27 EPS of $12.09, up from our prior PT of $320 on 32x our prior FY27 EPS of

$10.00. We believe continued positive order dynamics, as well as growth in both Wireless and

Wireline, A&D and Semi should continue to help fuel top-line moving through FY26.

KEYS: Quarterly and Annual EPS (USD)

2025 2026 2027 Change y/y

FY Oct Actual Old New Cons Old New Cons 2026 2027

Q1 1.82A 2.17A 2.17A 2.17A 2.53E 2.68E 2.50E 19% 24%

Q2 1.70A 2.32E 2.87A 2.32E 2.73E 2.98E 2.61E 69% 4%

Q3 1.72A 2.02E 2.47E 2.16E 2.30E 3.08E 2.60E 44% 25%